Builder confidence recovers from April COVID-19 slump

by Candyd Mendoza20 May 2020

With data showing that the housing market is gradually recovering, builder confidence in the market for single-family homes has rebounded from its eight-year low reading in April.

Builder confidence in newly-built single-family homes jumped seven points to 37 in May, according to the National Association of Home Builders/Wells Fargo Housing Market Index.

“Low interest rates are helping to sustain demand,” NAHB Chief Economist Robert Dietz said. “As many states and localities across the nation lift stay-at-home orders and more furloughed workers return to their jobs, we expect this demand will strengthen. Other indicators that suggest a housing rebound include mortgage application data that has posted four weeks of gains and signs that buyer traffic has improved in housing markets in recent weeks. However, high unemployment and supply-side challenges, including builder loan access and building material availability, are near-term limiting factors.”

All the HMI indices experienced increases in May. The HMI gauging current sales conditions rose six points to 42, the component measuring sales expectations in the next six months climbed 10 points to 46, and the measure charting traffic of prospective buyers moved up eight points to 21.

At a regional level, only the Northeast posted a decline in May, down two points to 32. Meanwhile, the Midwest saw a seven-point gain to 32, the South increased eight points to 42, and the West spiked 12 points to 44.

“The fact that most states classified housing as an essential business during this crisis helped to keep many residential construction workers on the job, and this is reflected in our latest builder survey,” said NAHB Chairman Dean Mon. “At the same time, builders are showing flexibility in this new business environment by making sure buyers have the knowledge and access to the homes they are seeking through innovative measures such as social media, virtual tours, and online closings.”