The National Association of Home Builders (NAHB) is reporting the single biggest change in their index. The NAHB/Wells Fargo Housing Market Index (HMI) reports that builders of newly-built single-family homes dropped an astounding 42 points to a 30. Confidence is being directly affected by the Coronavirus pandemic which has decimated all areas of the economy since inception.
The survey, which has been conducted for 30 years gauges builders of single-family homes’ sentiment for the next 6 months. They are able to reply with a response of “good”, “fair” or “poor”. They are also asked about the rate of traffic for prospective buyers and are able to reply with “high to very high,” “average” or “low to very low. Scores are then compiles and the number of 50 is when confidence is considered good.
The index number of 30 is the lowest since 2012 and the first time the index has been in the negative area since 2014. Although the numbers in the index seem dreary there is a silver lining with respect to construction of single-family properties in the future. Chief Economist for the NAHB says “Before the pandemic hit, the housing market was showing signs of strength with January and February new home sales at their highest pace since the Great Recession. To show how hard and fast this outbreak has hit the housing sector, a recent poll of our members reveals that 96% reported that virus mitigation efforts were hurting buyer traffic. While the virus is severely disrupting residential construction and the overall economy, the need and demand for housing remains acute. As social distancing and other mitigation efforts show signs of easing this health crisis, we expect that housing will play its traditional role of helping to lead the economy out of a recession later in 2020.”
Here is a breakdown regionally of HMI scores:
Northeast: The Northeast saw a drop of 45 points from 64 in March to 19 for April.
South: The South saw a drop of 42 points from March figure of 76 to 34.
Midwest: Midwest saw their average decrease 42 points as well from a March reading of 67 to 25 for April.
West: West region saw the biggest drop of 47 points in the index. Their average dropped from 79 in March to a 32.
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