Homebuilders aren’t feeling great about things.
The National Association of Home Builders and Wells Fargo Housing Market Index released Wednesday showed a 42-point drop in April, the largest single monthly change in the history of the index. The index sits at 30, the lowest point since June 2012 and the first time it has been in negative territory (below 50) since June 2014.
“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,” NAHB Chairman Dean Mon said.
The HMI index gauging current sales conditions dropped 43 points to 36, the component measuring sales expectations in the next six months fell 39 points to 36 and the gauge charting traffic of prospective buyers also decreased 43 points to 13.
Looking at the monthly averages regional HMI scores, the Northeast fell 45 points in April to 19, the Midwest dropped 42 points to 25, the South fell 42 points to 34 and the West dropped 47 points to 32.
“Before the pandemic hit, the housing market was showing signs of strength with January and February new home sales at their highest pace since the Great Recession,” NAHB Chief Economist Robert Dietz said.
NAHB released a survey last week that showed 96 percent saying the pandemic is having at least some effect on the number of prospective buyers. Eighty-seven percent of builders say clients are cancelling or delaying existing remodeling projects, and 80 percent say it is taking longer to get a plan review for a single-family home.
The latest HMI survey took place between April 1 and April 13.