The April NAHB/Wells Fargo Housing Market Index slipped back one point to 16, a level held in five of the past six months. Builders continue to feel competition and price pressure from foreclosed and distressed existing home sales as well as consumer hesitancy in light of the uncertain economic future.
Of the three components, the traffic index did increase by one point from 12 to 13 and many of the written comments mentioned not only an improvement in traffic but an improvement in the quality of buyer. Expectations for the next six months fell back to 23 from 26 in March and match the last low in October 2010. The current sales component fell back one point to 16, which was the level for all of the fourth quarter of 2010.
The general tenor in the April report remained cautious as potential buyers shopped for bargains and remained hesitant until economic signals are more consistently positive. The first time or starter home market was mentioned as a bright spot since those buyers did not have to sell a home.
On a regional basis, the South was responsible for the decline as the other three regions showed modest increases: Northeast up two points to 20, the Midwest up two points to 14 and the West even at 17. The South region fell to 15 from 19 in March and recorded the lowest level since September 2010. The sample is not large enough to measure state changes but the comments from Florida were particularly negative as foreclosures return after the pause due to paper work mistakes.