With mortgage rates still hovering around 7%, builder sentiment remained flat over the past month, and the latest inflation data failed to show improvement during the first quarter of 2024.
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), released Monday, indicates that builder confidence in the market for newly built single-family homes was 51 in April, unchanged from March. This breaks a four-month period of gains for the index, which nonetheless remains above the key break-even point of 50.
“With many frustrated buyers back on the fence waiting for interest rates to fall, policymakers can help ease affordability challenges by reducing inefficient regulatory rules that raise housing costs and limit supply,” NAHB Chairman Carl Harris, a custom home builder from Wichita, Kan., said in a statement.
Buyers are hesitating until they can better gauge where interest rates are headed, added Robert Dietz, the NAHB’s chief economist, noting that mortgage rates could moderate in the second half of the year.
Derived from a monthly survey that NAHB has conducted for more than 35 years, the NAHB/Wells Fargo HMI 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.
Looking at the three-month moving averages for regional HMI scores, the Northeast increased four points to 63, the Midwest gained five points to 46, the South rose one point to 51 and the West registered a four-point gain to 47.
