ConDig (15-Apr-20). US homebuilder confidence in the market for newly-built single-family homes plummeted in April in the wake of COVID-19 pandemic fears, with the index from the National Association of Home Builders (NAHB) posting its largest monthly decline.
The NAHB/Wells Fargo Housing Market Index (HMI) crashed 42 points in April to 30 and was the lowest builder confidence reading since June 2012. It is also the first time that builder confidence has been in negative territory, which is below 50, since June 2014.
“This unprecedented drop in builder confidence is due exclusively to the coronavirus outbreak across the nation, as unemployment has skyrocketed and gaps in the supply chain have hampered construction activities,” said NAHB chairman Dean Mon.
States in the US locked down much of the population in an attempt to contain the spread of the virus that has resulted in the country’s economy grinding to a halt, with no date set yet for resumption of economic activity.
The HMI index gauging current sales conditions dipped 43 points to 36, the component measuring sales expectations in the next six months fell 39 points to 36 and the gauge charting traffic of prospective buyers also crashed 43 points to 13.
A breakdown of the monthly averages showed the Northeast fell 45 points in April to 19; the Midwest tumbled 42 points to 25; the South crumbled 42 points to 34 and the West dropped 47 points to 32.
“To show how hard and fast this outbreak has hit the housing sector, a recent poll of our members reveals that 96 percent 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,” said NAHB chief economist Robert Dietz.
“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.”
As of April 14, the US had a reported 22,252 deaths related to COVID-19 and a total of 579,005 cases.