Homebuilder confidence in the U.S. has shown an unexpected deterioration in the month of April, according to a report released by the National Association of Home Builders on Monday, with the decrease marking the first drop in seven months.
The report showed that the NAHB/Wells Fargo Housing Market Index dropped to 25 in April from 28 in March. The decrease surprised economists, who had expected the index to edge up to 29.
NAHB Chief Economist David Crowe said, "What we're seeing is essentially a pause in what had been a fairly rapid build-up in builder confidence that started last September."
"This is partly because interest expressed by buyers in the past few months has yet to translate into expected sales activity, but is also reflective of the ongoing challenges that are slowing the housing recovery," he added.
The unexpected drop by the housing market index in April reflected decrease by all three of the components of the index.
The components gauging current sales conditions and sales expectations for the next six months both fell by three points to 26 and 32, respectively. Additionally, the component gauging traffic of prospective buyers fell by four points to 18.
The report also showed that the index for the South fell to 24 in April from 27 in March, while the index for the Midwest tumbled to 23 from 31.
Meanwhile, the index for the West came in unchanged at 32 and the index for the Northeast rose to 29 in April from 25 in March.
Barry Rutenberg, chairman of the NAHB, said, "Although builders in many markets are noting increased interest among potential buyers, consumers are still very hesitant to go forward with a purchase, and our members are realigning their expectations somewhat until they see more actual signed sales contracts."
Tuesday morning, the Commerce Department is scheduled to release its report on housing starts in the month of March. Economists expect housing starts to edge up to an annual rate of 700,000 in March from 698,000 in February.
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