After reporting U.S. homebuilder confidence at a nearly twelve-year high in the previous month, the National Association of Home Builders released a report on Monday showing a pullback in confidence in the month of April.
The report said the NAHB/Wells Fargo Housing Market Index dropped to 68 in April after jumping to 71 in March. Economists had expected the index to edge down to 70.
The bigger than expected decrease by the index came after it reached its highest level since June of 2005 in the previous month.
"Even with this month's modest drop, builder confidence is on very firm ground, and builders are reporting strong interest among potential home buyers," said NAHB Chairman Granger MacDonald.
The NAHB said all three components of the housing market index declined in April but remain at healthy levels.
The component measuring buyer traffic edged down by one point to 52 in April, while the components gauging current sales conditions and sales expectations in the next six months both fell by three points to 74 and 75, respectively.
"The fact that the HMI measure of current sales conditions has been over 70 for five consecutive months shows that there is continued demand for new construction," said NAHB Chief Economist Robert Dietz.
He added, "However, builders are facing several challenges, such as hefty regulatory costs and ongoing increases in building material prices."
Tuesday morning, the Commerce Department is scheduled to release a separate report on new residential construction in the month of March.
Housing starts are expected to dip to an annual rate of 1.262 million in March after jumping to a rate of 1.288 million in February.
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