With the West leading the way, builder confidence dropped to the lowest level since last year. Much of the weakening was due to current sales conditions.
A snapshot of builders’ perceptions of current single-family home sales and sales expectations, the Housing Market Index, landed at a seasonally adjusted 69 this month.
Turns out that builder confidence has descended to its lowest level since November 2017, when the index was determined to be a downwardly revised 69.
The National Association of Home Builders, which jointly produces the index with Wells Fargo, reported the data Monday. An index in excess of 50 indicates that more builders view conditions as good than poor.
While the index was down a point from March 2018, it has ascended a point from April 2017.
Even though the index is seasonally adjusted, NAHB Chief Economist Robert Dietz noted in the report that the dip in
this month’s index was likely due to winter weather effects in some pockets of the country. But he predicted modest gains in the spring.
NAHB Chairman Randy Noel explained in the report that builders continue to face supply-side constraints like a lack of build-able lots and increasing construction material costs. In addition, tariffs placed on Canadian lumber and other imported products are driving up prices and hurting housing affordability.
On a three-month rolling average, the index in the West was 76, sinking from a month earlier by three points — the most of any region. The Midwest declined two points to 66, and the Northeast was off one point to 55.
No change in the South left the index there at 73.
The national index is comprised of three components. The component that gauges current sales conditions dropped to 75, tumbling from March by two points. A one-point decline left the chart measuring sales expectations in the next six months at 77.
The component reflecting buyer traffic was 51, no different than in March.
