The National Association of Home Builders/Wells Fargo Housing Market Index, released Tuesday, remained essentially flat in April at 47. A level below 50 means more builders see the market for new, single-family homes as poor rather than good.
March’s level was revised down 1 point to 46.
The association’s chief economist, David Crowe, said builders are pessimistic for several reasons: tight credit for potential buyers and a short supply of skilled labor and ready-to-build lots. Still, he said, several factors point to “a gradual improvement in housing demand.”
“Job growth is proceeding at a solid pace, mortgage interest rates remain historically low, and home prices are affordable,” he said in a statement.
Though prices in most markets remain far below those of the bubble days, housing has become increasingly unaffordable for many after rapid price gains last year. That, along with a rise in mortgage rates, has slowed demand and the recovery.
Traffic from prospective buyers remains weak. That segment of the survey held flat in April, at a very low reading of 32 out of 100.
Although builders aren’t particularly excited now, they’re more optimistic about the future, the survey found: The segment gauging expectations for future sales rose 4 points to 57.