The latest sentiment data from the National Association of Home Builders/Wells Fargo Housing Market Index show that builder confidence held at 62 from February to March, dropping 8 points annually.
Newly elected NAHB Chairman Greg Ugalde tells CNBC, "Builders report the market is stabilizing following the slowdown at the end of 2018, and they anticipate a solid spring homebuying season." Interest rates increased over the course of 2018, but currently stand at historical lows. Builders report that new construction projects at the more affordable end of the spectrum continue to pose challenges due to ongoing skilled labor and land shortages.
Weak affordability has been the biggest problem in the new home market, as builders have largely focused on move-up homes rather than cheaper entry-level products. The median price of a new home sold in January was down nearly 4 percent annually, according to the U.S. Census. That was not necessarily because builders were lowering prices, but because a larger share of entry-level homes sold that month. Sales in January fell to a three-month low.
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