NAHB Housing Market Index: Builder Confidence Unchanged in April

The National Association of Home Builders (NAHB) Housing Market Index (HMI) is a gauge of builder opinion on the relative level of current and future single-family home sales. The data is collected from a monthly survey of about 900 home builders asking respondents to, "rate market conditions for the sale of new homes at the present time and in the next six months as well as the traffic of prospective buyers of new homes." It is a diffusion index, which means that a reading above 50 indicates a favorable outlook on home sales; below 50 indicates a negative outlook.

The latest index reading is at 51, unchanged from March and consistent with the forecast. Builder confidence was flat in April as mortgage rates remain close to 7% and inflation remains sticky.

Here's an excerpt from the press release:

“With many frustrated buyers back on the fence waiting for interest rates to fall, policymakers can help ease affordability challenges by reducing inefficient regulatory rules that raise housing costs and limit supply,” said NAHB Chairman Carl Harris, a custom home builder from Wichita, Kan.

“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.”

Here is the historical series, which dates from 1985.

NAHB Housing Market Index

Components of the the NAHB Housing Market Index

The NAHB Housing Market Index is calculated based off of three components: current sales, expected sales in the next 6 months, and traffic of prospective buyers. In April, the current sales component rose to 57, the expected sales component fell to 60, and the traffic component inched up to 35.

Housing Market Index: Regional Breakdown

The chart below gives a regional breakdown of the NAHB HMI in four regions of the country: Northeast, Midwest, South, and West. The Northeast, Midwest, and West increased from March while the South declined.