Builder Confidence Plummets in Historic Decline
Builder confidence dropped 42 points in April in the largest decline in the index’s history and the lowest reading since 2012, according to the NAHB/Wells Fargo Housing Market Index. For the first time since June 2014, builder confidence fell into negative territory, hitting 30 on the index. Financial experts say that this decline is entirely due to COVID-19: Before the pandemic started its spread in the country, the home building industry was cruising along in the best season it has had in awhile. But now with much of the U.S. shut down, buyer traffic has slowed to a snail’s pace for many builders.
Reflecting the growing effects of the COVID-19 pandemic, builder confidence in the market for newly-built single-family homes plunged 42 points in April to 30, according to the latest NAHB/Wells Fargo Housing Market Index (HMI) released today. The decline in April was the largest single monthly change in the history of the index and marks the lowest builder confidence reading since June 2012. It is also the first time that builder confidence has been in negative territory (below 50) since June 2014.
“This unprecedented drop in builder confidence is due exclusively to the coronavirus outbreak across the nation, as unemployment has skyrocketed and gaps in the supply chain have hampered construction activities,” said NAHB Chairman Dean Mon. “Meanwhile, there continues to be some confusion over builder eligibility for the Paycheck Protection Program, as some builders have successfully submitted loan applications while others have not been able to. NAHB is working with the White House, Treasury and Congress to get the broadest builder participation possible. Home building remains an essential business throughout most of the nation, and as the pandemic shows signs of easing in the weeks ahead, buyers should return to the marketplace.”