Daily Economic Update: Home Builders' Confidence

Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights home builders' confidence, import and export prices, and construction.

• Home builders’ confidence rose 1 point in March as measured by the latest Housing Market Index from the National Association of Home Builders/Wells Fargo. The index measures builders’ confidence and is an early indicator of the construction report due out tomorrow. This was the first increase after four consecutive flat months. The index for current conditions held steady at 17, while the expectations component rose 2 point to 27. Strength was concentrated in gains in the South and West. Despite the modest increase, the index remains weak and well below the critical 50 level above which more builders view the market as “good” rather than “poor”.
• Also released today was the import and export prices index from the Bureau of Labor Statistics. Import prices were 6.9% higher in February of 2011 than the same month in 2010. The bulk of the growth came from fuel prices, which are up 18.6% over this period, but non-fuel import prices are also up 3.6%.
• Construction was an important source of both income and job growth during most of the recent economic expansions. Construction growth is likely to follow sluggish builder confidence in the near term, but this should improve as sales eat away at the reserve of foreclosures and the economy slowly improves. Demand for renovations and remodeling has been on the rise as more people are choosing to extend their home tenure, a trend that has helped to ameliorate unemployment in this sector. Rising fuel prices are weighing on both consumers and REALTORS® who drive frequently for their work.