Builder confidence fell two points in March 2020, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) – March 2020 released on Tuesday.
While the HMI fell from 74 points in February to 72 points in March, the index remains relatively high compared to average HMIs in 2019, the majority of which lay in the 60s. However, next month’s index will be the first to incorporate sentiment from the Coronovirus shutdown.
The HMI is a weighted average of Present Single-Family Sales, Single-Family Sales for the Next Six Months, and Traffic of Prospective Buyers. A panel of builders rates the first two indices on a scale of “good,” “fair” or “poor” and the last index on a scale of “high to very high,” “average,” or “low to very low.” The subsequent indices are seasonally adjusted and then weighted in order to calculate the HMI. The HMI falls between 0-100.
The HMI Single Family Sales index also fell by two points from 81 in February to 79 in March. Likewise, the Traffic of Prospective Buyers index decreased from 57 in February to 56 in March. The Single Family Sales for the Next 6 Months index, however, made a sharper downturn from 79 in February to 75 in March.
Regionally, HMIs saw some movement in March as well. The Midwest, South and West all changed by three points between February and March with the South and West decreasing by three points (79 to 76 and 82 to 79 points, respectively), while the Midwest increased by three points (from 63 to 67 points). Meanwhile, the Northeast saw a modest decline of two points from 66 to 64.