Amid the mass shutdowns and economic uncertainty spurred by the coronavirus pandemic, builder confidence plummeted 42 points to a level of 30 in April, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index.
It is the largest single-month drop in the history of the index, and the lowest confidence reading since June 2012, according to NAHB.
“Unemployment has skyrocketed and gaps in the supply chain have hampered construction activities," NAHB Chairman Dean Mon said in a statement. "Meanwhile, there continues to be some confusion over builder eligibility for the Paycheck Protection Program, as some builders have successfully submitted loan applications while others have not been able to.”
Builder confidence had been on a positive trajectory prior to the outbreak, with new home sales at their highest pace since the Great Recession; April is the first month since June 2014 the confidence level has been below 50, considered “negative territory.”
Home building remains an essential business throughout much of the U.S., and NAHB noted that buyers should return to the market when the pandemic shows signs of easing.
“While the virus is severely disrupting residential construction and the overall economy, the need and demand for housing remains acute,” NAHB Chief Economist Robert Dietz stated. “As social distancing and other mitigation efforts show signs of easing this health crisis, we expect that housing will play its traditional role of helping to lead the economy out of a recession later in 2020."
