The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index shook off its winter slump in April. Builder sentiment rose four points to 56, suggesting the earlier pullback was transitory.
Builder Sentiment Recovers
- Builder sentiment increased and has now been above 50 for 10 consecutive months. Any reading above 50 indicates that more builders view conditions as “good” than “poor.”
- The Northeast and the South posted the largest gains after falling last month, suggesting previous declines may have been weather related. The South, where the majority of new homes are built, is now posting a solid reading of 59.
Expected Sales and Housing Starts
- The expected future sales component posted the strongest monthly gain, rising five points to a reading of 64. This indicates builders are optimistic about the spring selling season and suggests improvement in housing starts this year.
- Builder sentiment and housing starts have diverged recently. Constraints in the supply chain, which were cited as a cause of last month’s drop, may be contributing to the disconnect.
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