A lack of existing inventory on the market has pushed consumer demand toward new homes.
A short supply of housing resale inventory has resulted in cautious optimism from builders and an increase in new home demand.
But the residential construction industry continues to grapple with building material issues.
Builder confidence in the market for newly-built single-family homes in April rose one point to 45, according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released today.
“For the fourth straight month, builder confidence has increased due to a lack of resale inventory despite elevated interest rates,” said NAHB Chairman Alicia Huey, a custom home builder and developer from Birmingham, Ala. “Builders note that additional declines in mortgage rates, to below 6%, will price-in further demand for housing. Nonetheless, the industry continues to be plagued by building material issues, including lack of access to electrical transformer equipment.”
The HMI survey shows that the share of builders reducing home prices continues trending down, as 30% said they reduced prices in April, compared to 31% in March and February, 35% in December, and 36% in November.
The average price reduction in April was 6%, the same as in February and March but lower than in December (8%). The share of builders using incentives to bolster sales has edged up from 57% in February, to 58% in March to now 59% in April, but it’s still lower than it was last December (62%).