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Builder sentiment increased slightly in March, despite the continued affordability concerns expressed by many builders, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).
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.
“Affordability for buyers and builders remains a top concern,” says NAHB Chairman Bill Owens, a home builder and remodeler from Worthington, Ohio. “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.”
The survey revealed 37% of builders cut prices in March, up from 36% in February. The average price reduction remains stable at 6%. The use of sales incentives was 64%, down 1% from February.
“While the Freddie Mac 30-year fixed rate mortgage averaged 6.05% 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 NAHB Chief Economist Robert Dietz. “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.”
All three of the major HMI indexes were up in March. The HMI index gauging current sales conditions increased one point to 42 from February to March, the index measuring future sales gained two points to 49 and the index measuring traffic of prospective buyers posted a three-point increase to 25. Scores above 50 indicate that builders view conditions as good over poor.
