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Readings above 50 indicate more builders view sales conditions as good rather than poor. The index has been above 60 since September.
The latest reading marks the second decline in a row for the index, which reached the highest level in 11 years in December. The February number also fell shy of analyst predictions. They expected the index to hit 68, according to FactSet.
Builders’ view of sales now and over the next six months also fell, as did a gauge of traffic by prospective buyers.
Sales of new U.S. homes climbed to 563,000 last year, an increase of 12.2 percent from 2015. Low mortgage rates and a steadily improving job market drove much of the growth. But sales slowed in December following a jump in mortgage rates the previous month. January sales figures are due out next week.
The average rate on 30-year fixed-rate loans was 4.17 percent last week, down from 4.19 percent the previous week, but sharply higher than the 3.65 percent average for all of 2016, according to Freddie Mac.