The big post-election surge in home builder optimism is over as the February housing market index is down 2 points to a much lower-than-expected 65. This is still well above breakeven 50 and points to confidence but marks a noticeable drop from 67 and 69 in January and December.
The best news in the report is that home builders are reporting very little change in present sales, at 71 for only a 1 point dip. Six-month expectations are still very strong at 73, though down 3 points from January. The trouble in the report is a drop in the traffic component which, after popping to 11-year highs in January and December at 51 and 52, is now back in sub-50 contraction ground at 46.
The West, always a focused region for home builders, is the strongest at a 3-month average composite of 79 followed by the South at 67 and the Midwest at 65. The Northeast remains the weakest section for home builders at a composite of 50.
The drop in traffic is a disappointment and suggests that post-election confidence among new buyers, like that of home builders themselves, has also fizzled. Housing data lurched mostly higher in fits and starts during 2016 and today's report hints at more of the same for early 2017.