NAHB reports slight decline in builder confidence

by Lydia Bhattacharya

According to the most recent NAHB/Wells Fargo Housing Market Index, builders’ confidence in the market for newly-built single-family homes fell to a reading of 72 in March, marking a two point decrease. The HMI, which gauges current sales conditions, fell two points to 79, the component measuring sales expectations in the next six months dropped four points to 75, and the gauge charting traffic of prospective buyers also decreased one point to 56.

Based on the three-month moving averages for regional HMI scores, confidence among builders in the South fell one points to 77.

The novel coronavirus outbreak may have depressed the reading somewhat, but NAHB expects next month’s report to be even more negative. “Half of the builder responses the March HMI were collected prior to March 4, so the recent stock market declines and the rising economic impact of the coronavirus will be reflected more in next month’s report,” NAHB Chairman Dean Mon noted in a blog entry accompanying the data.

Builder confidence has remained stable for the last six months, hovering in the low- to mid-70s range.

Sales expectations decreased four points in response to the developments with the outbreak earlier this month. On the other hand, two trends that have created market opportunities for single-family homebuilders include low interest rates and a lack of inventory.

Overall, 21% of builders reported that they experienced some form of disruption in supply due to virus concerns in other countries, but for builders who responded to the survey after March 6, 33% reported disruptions in their supply.

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