US DATA: Homebuilder Sentiment Remains Subdued

The NAHB/Wells Fargo Housing Market Index was slightly stronger than expected in April but didn’t materially alter an outlook that suggests the current rebound in residential construction is likely to be subdued. 

• The housing market index ticked up to 40 (cons 38) in April after 39 in March, seeing some stabilization for a third month running at the lower end of a 39-51 range seen since early 2024.
• There were mixed drivers for April specifically: the heavily weighted present sales category increased for the first time since Jan (+2 to 45) whilst there was a small increase for prospective buyer traffic after two sizeable deadlines (+1 to 25) but six-month ahead sales expectations dropped further to 43 (-4) for the lowest since Nov 2023.
• Similar pace of home price declines: “The latest HMI survey also revealed that 29% of builders cut home prices in April, unchanged from March. Meanwhile, the average price reduction was 5% in April, the same rate as the previous month. The use of sales incentives was 61% in April, up from 59% in March.”
• Homebuilder sentiment remains more bearish on a relative historical basis than the price to book ratio of S&P 500 homebuilders although the latter has seen a significant correction since the US election.