NEW YORK - Builders’ confidence in the market for new single-family homes declined as the National Association of Home Builders' housing market index - a monthly gauge of builder sentiment – dropped to 25 in April from 28 in March.
Thomson Reuters' poll of economists predicted the index would be 28.
“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,” said NAHB Chairman Barry Rutenberg.
“What we’re seeing is essentially a pause in what had been a fairly rapid build-up in builder confidence that started last September, which is encouraging,” NAHB Chief Economist David Crowe said. “This is partly because interest expressed by buyers in the past few months has yet to translate into expected sales activity, but is also reflective of the ongoing challenges that are slowing the housing recovery – particularly tight credit conditions for builders and buyers, competition from foreclosures and problems with obtaining accurate appraisals.”
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as either "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as either "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.
All three component indexes decreased in April. The current single-family home sales index slumped to 26 from 29, and the sales expectations index for the next six months fell to 32 from 35. The traffic of prospective buyers index decreased to 18 from 22.
