Builder confidence in the market for newly built single-family homes rose one point to 38 in March, following a revised upward one-point revision in February, according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). All responses to the March survey were received after the conflict with Iran started.
“Affordability for buyers and builders remains a top concern,” said Bill Owens, chairman of NAHB. “Many buyers remain on the fence waiting for lower interest rates and due to economic uncertainty. Builders are facing elevated land, labor and construction costs and nearly two-thirds continue to offer sales incentives in a bid to firm up the market.”
“While the Freddie Mac 30-year fixed rate mortgage averaged 6.05 percent in February, the lowest since August 2022, downpayment hurdles and uncertainty from the conflict with Iran and the price of oil will be headwinds going forward,” said Robert Dietz, chief economist for NAHB. “The administration’s executive orders issued last week to reduce regulatory burdens associated with home building are a positive step toward increasing attainable housing supply.”
The latest HMI survey also revealed that 37 percent of builders cut prices in March, up slightly from 36 percent in February. The average price reduction remained stable at 6 percent. The use of sales incentives was 64 percent in March, down one percentage point from February, and marking the 12th consecutive month this share has exceeded 60 percent.
Derived from a monthly survey that NAHB has been conducting for more than 40 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair,” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average,” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.