Homebuilder confidence in the U.S. unexpectedly decreased in the month of April, according to a report released by the National Association of Home Builders on Monday, with the drop reflecting increasing costs for building materials and rising concerns about the supply of developed lots and labor.
The report showed that the NAHB/Wells Fargo Housing Market Index fell for the third straight month, dropping to 42 in April from 44 in March. The decrease came as a surprise to economists, who had expected the index to inch up to 45.
"Supply chains for building materials, developed lots and skilled workers will take some time to re-establish themselves following the recession, and in the meantime builders are feeling squeezed by higher costs and limited availability issues," said NAHB Chief Economist David Crowe.
He added, "That said, builders' outlook for the next six months has improved due to the low inventory of for-sale homes, rock bottom mortgage rates and rising consumer confidence."
The NAHB said the component gauging current sales conditions dipped to 45 in April from 47 in March, while the component gauging buyer traffic fell to 30 from 34.
On the other hand, the component gauging sales expectations in the next six months climbed to 53 in April from 50 in March, reaching its highest level since February of 2007.
The report also showed a notable decrease by the housing market index for the Midwest, which tumbled to 41 in April from 49 in March.
The index for the Northeast also fell to 34 in April from 38 in March, while the index for the West dropped to 52 from 55 and the index for the South edged down to 40 from 42.
Tuesday morning, the Commerce Department is scheduled to release its report on new residential construction in the month of March.
Economists expect housing starts to rise to an annual rate of 930,000 in March from 917,000 in February, while building permits are expected to slip to 942,000 from a four-year high of 946,000.
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