Builder Sentiment in April Declines for Fourth Consecutive Month

On Monday (4-18-22), The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) reported that builder sentiment in the market for newly built single-family homes edged two points lower in April to a reading of 77. The HMI has posted solid reading for the past 6 months, despite declining for the past four consecutive months.

According to the NAHB, any reading above 50 indicates that more builders view conditions as good rather than poor and that demand remains strong.

The NAHB notes that even with low existing inventory, builders continue to report that their current sales traffic and current sales conditions have declined to their lowest points since last summer. This has occurred as a sharp increase in mortgage rates—up 1.9 percentage points since the start of 2022—and ongoing supply chain disruptions continue to keep the housing market unsettled.

The NAHB points to the significant headwinds of rising home prices, the increases in mortgage rates, and escalating materials costs all of which are decreasing housing affordability, especially in the important entry-level housing market.

Looking at the three-month moving averages for regional HMI scores, the Northeast posted a 1-point gain to a reading of 72; the Midwest dropped 3-points to a reading of 69; the South fell 2-points to a reading of 82; and the West edged 1-point lower to a reading of 89.