Builder sentiment in the market for newly built homes rose in April for the fourth straight month, as the supply of existing homes for sale remains scarce.
The NAHB index rose two points to 44 in March, according to a Wednesday press release. The mild rise in homebuilder confidence exceeded economists’ expectations; a Wall Street Journal (WSJ) poll of economists believed the index would drop to 40. The NAHB’s March score is the highest reading since September 2022.
Housing recessions matter because they are the ‘canary in the coal mine’ for economy-wide recessions. Not all economic recessions follow housing recessions1, but most housing recessions presage economic recessions.
Federal Reserve Chair Jerome Powell warned that the US housing market is likely to suffer a reversal in the wake of policy makers’ interest-rate hikes.
More builders are lowering prices for homes as their confidence in the market continues to tumble. Homebuilder sentiment in September fell 3 points to 46 in the National Association of Home Builders/Wells Fargo Housing Market Index. Anything below 50 is considered negative.
Less than a year after voters approved some of the strictest rent control measures in the country, the St. Paul, Minnesota, city council appears set to approve exemptions for new construction projects and other reforms opposed by activists.
High inflation, weakening builder sentiment and increasing mortgage rates added to the industry’s previous list of headwinds, exacerbating a pullback in the single-family market as multifamily development continues to grow.
Privately‐owned housing starts in May were at a seasonally adjusted annual rate of 1,549,000. This is 14.4 percent below the revised April estimate of 1,810,000 and is 3.5 percent below the May 2021 rate of 1,605,000. Single‐family housing starts in May were at a rate of 1,051,000; this is 9.2 percent below the revised April figure of 1,157,000. The May rate for units in buildings with five units or more was 469,000.
Apartment construction activity in the U.S. is at a record high, led by some key markets that are logging significant building rates.
Following March’s modest rise in Housing Starts and Permits, analysts expected reality to catch up with the homebuilder market in April (just as we saw in the NAHB sentiment survey slumping to 2 year lows).