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Builder confidence drops a point but remains solid in April

By / April 16, 2018

WASHINGTON — Builder confidence in the market for newly built single-family homes edged down one point to a level of 69 in April on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) but remains on firm ground.

Builder Lumber Frame“Strong demand for housing is keeping builders optimistic about future market conditions,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “However, builders are facing supply-side constraints, such as a lack of buildable lots and increasing construction material costs. Tariffs placed on Canadian lumber and other imported products are pushing up prices and hurting housing affordability.”

“Ongoing employment gains, rising wages and favorable demographics should spur demand for single-family homes in the months ahead,” said NAHB Chief Economist Robert Dietz. “The minor dip in builder confidence this month is likely due to winter weather effects, which may be slowing housing activity in some pockets of the country. As we head into the spring home buying season, we can expect the market to continue to make gains at a gradual pace.”

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

The HMI index gauging buyer traffic held steady at 51, the chart measuring sales expectations in the next six months fell a single point to 77, and the component gauging current sales conditions dropped two points to 75.

Looking at the three-month moving averages for regional HMI scores, the South remained unchanged at 73, the Northeast fell one point to 55, the Midwest declined two points to 66, and the West dropped three points to 76.

 

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