Builder sentiment was unchanged from March to April, with the National Association of Home Builders (NAHB)/Wells Fargo (NYSE:WFC) Housing Market Index (HMI) staying at 51 – the first static reading after four months of index gains.
The HMI index charting current sales conditions in April inched up by one point to 57 and the component gauging traffic of prospective buyers also edged one point higher to 35. The component measuring sales expectations in the next six months dipped two points to 60.
Looking at the three-month moving averages for regional HMI scores, the Northeast increased four points to 63, the Midwest gained five points to 46, the South rose one point to 51 and the West registered a four-point gain to 47.
The April HMI survey also revealed that 22% of builders cut home prices this month, down from 24% in March and 36% in December 2023. However, the average price reduction in April held steady at 6% for the 10th straight month. Meanwhile, the use of sales incentives ticked down to 57% in April from a reading of 60% in March.
“April’s flat reading suggests potential for demand growth is there, but buyers are hesitating until they can better gauge where interest rates are headed,” said NAHB Chief Economist Robert Dietz. “With the markets now adjusting to rates being somewhat higher due to recent inflation readings, we still anticipate the Federal Reserve will announce future rate cuts later this year, and that mortgage rates will moderate in the second half of 2024.”
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