Builder sentiment was unchanged at 51 in April, remaining positive for the second consecutive month; anything below 50 is considered negative for the National Association of Home Builders’ monthly survey, according to NAHB. It reached a record high of 90 in November 2020.
Two of the three components of the homebuilder index increased, with current sales conditions rising one point to 57 and buyer traffic increasing one point to 35. Sales expectations in the next six months fell two points to 60.
“April’s flat reading suggests potential for demand growth is there, but buyers are hesitating until they can better gauge where interest rates are headed,” said NAHB Chief Economist Robert Dietz. “With the markets now adjusting to rates being somewhat higher due to recent inflation readings, we still anticipate the Federal Reserve will announce future rate cuts later this year, and that mortgage rates will moderate in the second half of 2024.”
The average rate on the 30-year fixed mortgage has hovered around 7% since early February.
Twenty-two percent of builders reported cutting prices in April, which is down from 24% in March. The average price discount is holding at 6% for the 10th straight month. Additionally, 57% of builders provided sales incentives of all types in April, which is down from 60% in March.
