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The Week Ahead: A Dilemma Among Home Builders

construction-twoBoth new residential construction numbers and home builder confidence were shaky last month, as housing starts, authorizations, permits, and optimism among builders slipped. However, the industry is anticipating a complete turnaround from the previous numbers and for home builders to come out of the new year slump.

The U.S. Census Bureau and the Department of Housing and Urban Development's new residential construction statistics for January 2016, and the numbers were encouraging, if not remarkable.

There were 731,000 single-family housing starts in January, 4 percent lower than in December, while there were 1.5 million privately-owned housing completions in January, which is down 2 percent from December but 8.4 percent over the year prior.

“The key findings from today’s report is that month-to-month we’re seeing little change in new construction, but year-over-year there is solid growth,” Smoke said.  “In addition, permits remain higher than starts, which is a good sign for expansion ahead.”

Builder confidence in the market for newly-built single-family homes is still doing well, but has dropped since last month, according to the National Association of Home Builders/Wells Fargo Housing Market Index, or HMI.

The latest HMI showed builder confidence to be at 58 in February, down from January’s 61 and seven points lower than its recent peak  of 65 in October. That said, the index is still well above the tipping point of 50 and three points above last February’s number.

NAHB Chairman Ed Brady attributed the dip to the high cost and lack of availability of lots and labor, but said that February’s index shows builders are still generally optimistic about the housing market.

“Of note, they expressed optimism that sales will pick up in the coming months,” Brady said, despite that consumers have expressed some worries about the housing market over the past few months.

Here is the lineup for the week:

Tuesday, March 15, 2016

Federal Open Market Committee (FOMC) Meeting Begins

National Association of Home Builders (NAHB) Housing Market Index- 10:00 A.M. EST

Wednesday, March 16, 2016

U.S. Census Bureau and HUD Housing Starts- 8:30 A.M. EST

FOMC Meeting Announcement- 2:00 P.M. EST

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