WASHINGTON – According to the National Association of Home Builder’s (NAHB)/Wells Fargo Housing Market Index (HMI), builder confidence for newly-built single-family homes fell two points to 72 in March. Sentiment levels have held in a firm range in the low- to mid-70s for the past six months.
“Builder confidence remains solid, although sales expectations for the next six months dropped four points on economic uncertainty stemming from the coronavirus,” said NAHB Chairman Dean Mon, a home builder and developer from Shrewsbury, N.J. “Interest rates remain low, and a lack of inventory creates market opportunities for single-family builders.”
“It is important to note that half of the builder responses in the March HMI were collected prior to March 4, so the recent stock market declines and the rising economic impact of the coronavirus will be reflected more in next month’s report,” said NAHB Chief Economist Robert Dietz. “Overall, 21 percent of builders in the survey report some disruption in supply due to virus concerns in other countries such as China. However, the incidence is higher (33 percent) among builders who responded to the survey after March 6, indicating that this is an emerging issue.”
The HMI index gauging current sales conditions fell two points to 79, the component measuring sales expectations in the next six months dropped four points to 75 and the gauge charting traffic of prospective buyers also decreased one point to 56.
Looking at the three-month moving averages for regional HMI scores, the Midwest fell two points to 66, the South moved one point lower to 77 and the West posted a one-point decline to 82. The Northeast rose two points to 64.
Sales prior to coronavirus outbreak
Sales of newly built, single-family homes fell 4.4 percent to a seasonally adjusted annual rate of 765,000 units in February, coming off a sharp upward revision in January, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The February rate is 14.3 percent higher than the February 2019 pace, and January and February readings mark the highest monthly sales paces since July 2007.
“Sales were on solid footing as we entered 2020, but this could be the high water mark for the next few months as consumers contend with the coronavirus outbreak,” said Dean Mon, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Shrewsbury, N.J.
“The February numbers reflect the strong state of the market before coronavirus concerns set in,” said NAHB Chief Economist Robert Dietz. “Given the momentum in the housing market at the start of the year, we do expect sales and construction activity to weaken during the third quarter; but housing’s potential suggests it will be a sector that will help lead the economy during the eventual rebound once virus mitigation is complete.”
Inventory fell to a 5 months’ supply, with 319,000 new single-family homes for sale, 6.7 percent lower than February 2019. Of that total, just 75,000 are completed, ready to occupy. The median sales price was $345,900. The median price of a new home sale a year earlier was $320,800.
Regionally, new home sales are 38.9 percent higher in the Northeast and 1 percent higher in the South. Sales are down 7.3 percent in the Midwest and 17.2 percent in the West.
For more information on housing statistics, visit housingeconomics.com and view HMI tables at nahb.org/hmi.
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