Builder confidence in the market for newly built single-family homes rose one point to 63 in April, according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). Sentiment levels have held in the low 60s for the past three months.
“Builders report solid demand for new single-family homes but they are also grappling with affordability concerns stemming from a chronic shortage of construction workers and buildable lots,” said Greg Ugalde, NAHB chairman and a home builder and developer from Torrington, Conn.
“Ongoing job growth, favorable demographics and a low-interest rate environment will help to modestly spark sales growth in the near term,” said Robert Dietz, chief economist for the NAHB. “However, supply-side headwinds that are putting upward pressure on housing costs will limit more robust growth in the housing market.”
Derived from a monthly survey that NAHB has been conducting for 30 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.
The HMI index gauging current sales conditions increased one point to 69, and the component measuring traffic of prospective buyers rose three points to 47. The measure charting sales expectations in the next six months fell one point to 71.
Looking at the three-month moving averages for regional HMI scores, the Northeast posted a three-point gain to 51, the Midwest increased two points to 53, and the South was up one point to 67. The West remained unchanged at 69.