Home builders gave the mildest thumbs up to their industry this month.
Builder confidence in the market for newly built single-family homes inched up by a single point this month in the latest Housing Market Index (HMI) report from the National Association of Home Builders (NAHB) and Wells Fargo (NYSE:WFC).
The HMI survey showed the percentage of builders reducing home prices continued trending down, as 30% said they reduced prices in April – that share was 31% in March and February, 35% in December and 36% in November. The average price reduction in April was 6%, the same as in February and March but lower than December’s 8%. And the share of builders using incentives to bolster sales was 59% in April – inching up up from 57% in February to 58% in March but still lower than last December’s 62%.
“For the fourth straight month, builder confidence has increased due to a lack of resale inventory despite elevated interest rates,” said NAHB Chairman Alicia Huey, a custom home builder and developer from Birmingham, Alabama. “Builders note that additional declines in mortgage rates, to below 6%, will price-in further demand for housing. Nonetheless, the industry continues to be plagued by building material issues, including lack of access to electrical transformer equipment.”
“Currently, one-third of housing inventory is new construction, compared to historical norms of a little more than 10%,” added NAHB Chief Economist Robert Dietz. “More buyers looking at new homes, along with the use of sales incentives, have supported new home sales since the start of 2023. And while AD&C loan conditions are tight, there is not significant evidence thus far that pressure on the regional bank system has made this lending environment for builders and land developers worse.”
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