The National
Association of Homebuilders (NAHB) announced on Wednesday that its housing
market index (HMI) increased to 40 in April from an unrevised March reading of 40. That marked the first improvement
in builder confidence in three months.
Economists had anticipated the HMI to drop to 37.
A reading below
50 indicates more builders view conditions as poor than good.
According to
the report, two out of three major HMI components registered gains in early April. The component tracking
current sales conditions went up 2 points to 45, and the component measuring
traffic of prospective buyers rose by 1 point to 25. Meanwhile, the component
charting sales expectations in the next six months plunged by 4 points to 43.
Commenting on
the latest report, NAHB Chairman Buddy Hughes said that the recent dip in
mortgage rates may have pushed some buyers off the fence in March, helping
builders with sales activity. “At the same time, builders have expressed
growing uncertainty over market conditions as tariffs have increased price
volatility for building materials at a time when the industry continues to
grapple with labour shortages and a lack of buildable lots,” he added.
Meanwhile, NAHB
Chief Economist Robert Dietz stated that policy uncertainty is having a
negative impact on home builders, making it difficult for them to accurately
price homes and make critical business decisions. “The April HMI data indicates
that the tariff cost effect is already taking hold, with the majority of
builders reporting cost increases on building materials due to tariffs,” he
added.