Homebuilder confidence in the U.S. saw a record monthly decline in the month of April, according to a report released by the National Association of Home Builders on Wednesday.
The report said the NAHB/Wells Fargo Housing Market Index plummeted to 30 in April after slipping to 72 in March. Economists had expected the index to tumble to 55.
The steep drop reflected the largest single monthly change in the history of the index and marks the lowest builder confidence reading since June 2012.
“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.
He added, “Home building remains an essential business throughout most of the nation, and as the pandemic shows signs of easing in the weeks ahead, buyers should return to the marketplace.”
The record nosedive by the NAHB’s housing market index reflected steep drops by all three of the component indices.
The index gauging current sales conditions and the gauge charting traffic of prospective buyers both plunged by 43 points to 36 and 13, respectively.
The component measuring sales expectations in the next six months also showed a substantial decrease, plummeting by 39 points to 36.
“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.
He added, “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.”
On Thursday, the Commerce Department is scheduled to release a separate report on new residential construction in the month of March.
Housing starts are expected to drop to an annual rate of 1.350 million in March from 1.599 million in February, while building permits are expected to slump to a rate of 1.300 million from 1.464 million.
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