U.S. Home-Builder Sentiment Unchanged as Buyers Spurn High Mortgage Rates

By Ed Frankl

Confidence among U.S. home builders held steady in April, as high mortgage rates and recent hotter-than-expected inflation readings led to caution from prospective buyers, according to a report from the National Association of Home Builders released Monday. Here are the report's main takeaways:

--The NAHB's housing-market index, produced in conjunction with Wells Fargo, held steady at 51 in April, the same as in March, and matching a consensus of economists polled by The Wall Street Journal. The index is a gauge of builder confidence in the market for single-family housing.

--The reading stalls a four-month period of gains for the index, which nevertheless remains above the breakeven point of 50.

--"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," NAHB Chief Economist Robert Dietz said. Mortgage rates should moderate in the second half of 2024, even after markets adjusted to rates being somewhat higher due to recent inflation data, he added.

--Two of the three major components of the housing-market index improved in April. The measures of current sales conditions and traffic of prospective buyers edged up, while the component for sales expectations ticked down.

--Some 22% of builders cut home prices this month, lower than the 24% in March. Average price reductions in April remained at 6% for the tenth straight month, NAHB said.

--"With many frustrated buyers back on the fence waiting for interest rates to fall, policymakers can help ease affordability challenges by reducing inefficient regulatory rules that raise housing costs and limit supply," NAHB Chairman Carl Harris said.

Write to Ed Frankl at edward.frankl@wsj.com

(END) Dow Jones Newswires

April 15, 2024 10:18 ET (14:18 GMT)

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