Builder confidence for newly built single-family homes fell to 30 points in April, down more than half from 72 points in March, according to data from the National Association of Home Builders (NAHB) and Wells Fargo.
The numbers are an enormous drop from moderately fluctuating builders confidence over the last year. After sitting at 62 points in March 2019, the numbers rose steadily — peaking at 76 points in December and never going below 72 points in 2020.
Such an extreme drop in builder confidence is caused, without doubt, by the uncertainty surrounding markets and industry during the coronavirus pandemic. As cities shut down and millions are being laid off or furloughed, even those who are still working are hesitant to buy or build homes due to overall financial uncertainty in the country.
HMI is a weighted average of separate indices for three single-family data points. It asks respondents to rate the market conditions for the sale of new homes at present and in the next six months, as well as the traffic of prospective buyers of new homes. It falls in a range of 0-100.
The index measuring current sales conditions also fell from 79 to 36. Sales expectations over the next six months fell 75 to 36 while buyer traffic fell from 56 to 13. Scores below 50 are considered to be a negative outlook.