The numbers: The National Association of Home Builders’ monthly confidence gauge ticked down one point to a reading of 70 in March, the group said Thursday.
What happened: After touching the highest since 1999 in December, the closely-watched sentiment tracker from the home builder lobby group fell for the third straight month in March. February’s reading was revised down one tick, to 71.
Economists surveyed by Econoday had forecast an unchanged reading of 72 in March.
The sub-gauge that measures views on current sales conditions was unchanged at 77, but the measure of sales over the next six months dipped two points to 78. The index of buyer traffic fell three points to 51.
Any reading over 50 signals improving conditions.
The big picture: A reading of 70 is still very strong. In 2004-2005, the heady days of the housing bubble, sentiment only averaged 68.
In a statement, NAHB said: “Builders’ optimism continues to be fueled by growing consumer demand for housing and confidence in the market,” and pointed only to challenges finding buildable lots as headwinds.
Consumer demand is certainly elevated. The Mortgage Bankers Association said Tuesday that mortgage applications for new home purchases were 4.6% higher in February compared to a year ago, and inventory of previously-owned homes is at multi-decade lows.
Read: Existing-home sales tumble at the fastest pace in more than 3 years as supply crunch deepens
But it’s more likely that some of the moderation in sentiment is due to recent Washington trade policies that are increasing costs for builders. On Wednesday, the Associated General Contractors of America, another trade group, said prices of goods and services used in construction projects including items consumed by contractors, such as diesel fuel, rose 0.6% in February alone and 4.4% over the past 12 months.
Those price increases are only as of mid-February, the group added. “Since then, producers of steel and concrete have implemented or announced substantial additional increases, and the huge tariffs the President has imposed will make steel, aluminum and many products that incorporate those metals even more expensive.”
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