Builder Confidence and Home Construction Hit Hard

Builder Confidence and Home Construction Hit Hard

The NAHB Housing Market Index, which is a real-time read on builder confidence, dropped a whopping 42 points to 30 in April. This was well below the shot in the dark estimate of 55 and the largest one-month drop ever!

Note that a reading of 50 is the baseline, with a number above it signaling expansion and below signaling contraction. The index tracks three components, and all saw big declines. Current sales expectations fell 43 points to 36, sales expectations for the next six months dropped 39 points to 36, and buyer traffic dropped 43 points to 13.

The NAHB stated the obvious, “This unprecedented drop in builder confidence is due exclusively to the coronavirus outbreak across the nation, as unemployment has skyrocketed and gaps in the supply chain have hampered construction activities.”

Data on home construction confirms this sentiment, as Housing Starts for March plummeted 22.3% while Building Permits, which are a sign of future construction, fell almost 7%.

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