Builder confidence in the market for newly built, single-family homes declined for the first time in seven months this April, sliding three notches to 25 on the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). The decline brings the index back to where it was in January, which was the highest level since 2007.
Derived from a monthly survey that the NAHB has been conducting for 25 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 from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good rther than poor.
Each of the index's components registered declines in April. The component gauging current sales conditions and the component gauging sales expectations in the next six months each fell three points, to 26 and 32, respectively, while the component gauging traffic of prospective buyers fell four points to 18.
Regionally, the HMI results were somewhat mixed in April, with the Northeast posting a four-point gain to 29 (its highest level since May 2010), the West posting no change at 32, the South posting a three-point decline to 24 and the Midwest posting an eight-point decline to 23.Â Â Â Â
‘Although builders in many markets are noting increased interest among potential buyers, consumers are still very hesitant to go forward with a purchase, and our members are realigning their expectations somewhat until they see more actual signed sales contracts,’ says Barry Rutenberg, chairman of the NAHB and a home builder from Gainesville, Fla.