Builder Confidence Inches Higher in April

by Peter Thomas Ricci

Though still low, builder confidence showed improvement in April, according to new NAHB numbers.

Builder confidence recovered somewhat from March to April, inching up from 46 to 47, according to the latest Housing Market Index from the National Association of Home Builders.

Though not a substantial increase, April’s reading does reverse 2014’s declines, which saw the Housing Market Index fall from a post-bubble high of 56 down to 46.

Kevin Kelly, the current chairman of the NAHB, said confidence has been in a “holding pattern” in the run-up to the spring homebuying season.

“Builder confidence has been in a holding pattern the past three months,” he said. “Looking ahead, as the spring home buying season gets into full swing and demand increases, builders are expecting sales prospects to improve in the months ahead.”

Builder Confidence in the Post-Bubble Housing Market

Some of the specific findings in the Housing Market Index included:

  • With the overall index at 47, we’re still below the magic number of 50, which is when more homebuilders see market conditions as good than as bad.
  • Looking at the individual segments of the index tell an interesting story; for instance, the index gauging current sales conditions held steady at 51, though the index measuring traffic of perspective buyers remained low at 32.
  • Meanwhile, the index for future sales expectations rose a whopping four points to 57, which is highly encouraging.
  • Regionally, the Housing Market Index’s three-month moving average was down in all four regions. The West fell nine points to 51 and the Midwest posted a four-point decline to 49, while the Northeast and South each dropped two points to 33 and 47, respectively.

For further perspective, here’s a graph that shows how the Housing Market Index has progressed the last 15 years:

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