U.S. Builder Confidence Declines in April
Apr 18, 2006
 Print this page

Rising mortgage rates, continued affordability issues and subsiding demand from investors/speculators are prompting single-family home builders to adjust their perspectives on the new-home market, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for April.

The HMI declined four points from a downwardly revised reading in the previous month to hit 50 for the latest report.

"With mortgage rates back up to the 6.5 percent range and serious affordability issues in the highest-priced markets, today's HMI numbers are neither surprising nor alarming," noted NAHB Chief Economist David Seiders. "Indeed, a reported reduction in home buying by investors/speculators in the market for new single-family homes is a positive development. Furthermore, we expect solid growth in employment and household income to essentially offset the minor increases in the interest-rate structure that we're projecting for the balance of this year."

All three component indexes slipped this month, with the largest decline registered for current single-family sales. That component declined five points to 54 in April, while the component for sales expectations in the next 6 months was down four points to 58 and the component gauging traffic of prospective buyers declined a single point to 39.

Regionally, only builders in the West registered greater confidence in market conditions in April than in the previous month; there, a four-point gain to 70 partially offset a significant decline in March. Meanwhile, the HMI for the Northeast posted a seven-point decline to 49, the HMI for the South recorded a four-point decline to 55, and the HMI for the Midwest showed continued weakness in that region with a five-point decline to 32.

Back to Breaking News