Builder sentiment remained unchanged in April as mortgage rates held steady at 7%, and the latest inflation data showed no signs of improvement in the first quarter of 2024. According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released today, builder confidence in the market for newly built single-family homes stayed at 51, the same as in March.
NAHB Chairman Carl Harris, a custom home builder from Wichita, Kan., highlighted the importance of policy changes, stating, "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 Chief Economist Robert Dietz noted, "April’s flat reading suggests potential for demand growth is there, but buyers are hesitating until they can better gauge where interest rates are headed." He also expressed optimism about future rate cuts, anticipating that "mortgage rates will moderate in the second half of 2024."
The April HMI survey showed that while 22% of builders reduced home prices this month, down from 24% in March, the average price reduction remained steady at 6%. Additionally, the use of sales incentives decreased to 57% in April from 60% in March.
The NAHB/Wells Fargo HMI, a long-standing monthly survey, assesses builder perceptions of current single-family home sales and sales expectations for the next six months. Scores above 50 indicate that more builders view conditions as good than poor.
In April, the HMI index for current sales conditions rose one point to 57, while the index for traffic of prospective buyers increased by one point to 35. However, the index for sales expectations in the next six months fell by two points to 60.
Regionally, the Northeast experienced a four-point increase to 63 in the three-month moving average HMI scores. The Midwest gained five points to 46, the South rose one point to 51, and the West saw a four-point gain to 47.
For more detailed information on the HMI, visit nahb.org/hmi, and for additional housing statistics, explore Housing Economics PLUS at housingeconomics.com.
