Economic Snapshot: Builder confidence drops from March, remains healthy

Builder confidence in the market for newly built single-family homes fell three points to a level of 68 in April on the National Association of Home Builders/Wells Fargo Housing Market Index. The drop follows a 12-year high in March.

“Even with this month’s modest drop, builder confidence is on very firm ground, and builders are reporting strong interest among potential home buyers,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas. 

All three HMI components posted losses in April but remain at healthy levels. The components gauging current sales conditions and the index charting sales expectations in the next six months both fell three points, to 74 and 75, respectively. The component measuring buyer traffic edged down one point to 52.

“The fact that the HMI measure of current sales conditions has been over 70 for five consecutive months shows that there is continued demand for new construction,” said NAHB Chief Economist Robert Dietz. “However, builders are facing several challenges, such as hefty regulatory costs and ongoing increases in building material prices.”

Looking at the three-month moving averages for regional HMI scores, the West and Midwest both rose one point to 77 and 68, respectively. The South held steady at 68 and the Northeast fell two points to 46.

Housing starts

Privately owned housing starts were at a seasonally adjusted annual rate of 1,215,000 in March. This is 6.8 percent below the revised February estimate of 1,303,000, but is 9.2 percent above the March 2016 rate of 1,113,000.

Single-family housing starts were at a rate of 821,000 in March. This is 6.2 percent below the revised February figure of 875,000.

Privately owned housing completions were at a seasonally adjusted annual rate of 1,205,000 in March. This is 3.2 percent above the February estimate 1,168,000 and is 13.4 above the March 2016 rate of 1,063,000.

Single-family housing completions were at a rate of 819,000 in March. This is 7.9 percent above the revised February rate of 759,000.

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