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Friday, May 22, 2020
HomeNewsEconomyBuilder Confidence Eases Slightly But Remains Strong Amid Rising Uncertainty

Builder Confidence Eases Slightly But Remains Strong Amid Rising Uncertainty

Builder confidence and residential construction, hew homes, housing starts, building permits, depicted on blueprints. (Photo: AdobeStock)

Housing Market Index (HMI) Holds Firm in Low 70s

The NAHB/Wells Fargo Housing Market Index (HMI) finds builder confidence eased two points to 72 but remained solid amid rising uncertainty. Sentiment levels for newly-built single-family homes have held in a firm range in the low- to mid-70s for the past six months.

“Builder confidence remains solid, although sales expectations for the next six months dropped four points on economic uncertainty stemming from the coronavirus,” said NAHB Chairman Dean Mon. “Interest rates remain low, and a lack of inventory creates market opportunities for single-family builders.”

Builder confidence and residential construction, hew homes, housing starts, building permits, depicted on blueprints. (Photo: AdobeStock)
Builder confidence and residential construction, hew homes, housing starts, building permits, depicted on blueprints. (Photo: AdobeStock)

The NAHB has conducted the HMI for 30 years to gauge builder confidence in the current market for single-family home sales and sales expectations for the next six months. It asks them to rate each 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 derive a seasonally adjusted index. A reading over 50 indicates that more builders view conditions as good than poor.

“It is important to note that half of the builder responses in 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,” said NAHB Chief Economist Robert Dietz. “Overall, 21% of builders in the survey report some disruption in supply due to virus concerns in other countries such as China. However, the incidence is higher (33%) among builders who responded to the survey after March 6, indicating that this is an emerging issue.”

The HMI index gauging current sales conditions fell only two points to 79, while the component measuring sales expectations in the next six months dropped four points to 75. The gauge of traffic for prospective buyers also fell one point to 56.

Builder Confidence By Region (3M Average)

Looking at the three-month moving averages for regional HMI scores, the Midwest fell two points to 66, the South moved one point lower to 77 and the West posted a one-point decline to 82. The Northeast rose two points to 64.

Written by
Staff Writing Group

PPD Business, the economy-reporting arm of People's Pundit Daily, is "making sense of current events." We are a no-holds barred, news reporting pundit of, by, and for the people.

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