Homebuilder sentiment declines in March as sales views dim

Homebuilder sentiment fell to a four-month low in March as expectations of future sales dimmed amid a virus outbreak that threatens to dent activity across the industry and cause a recession.

The National Association of Home Builders/Wells Fargo Housing Market Index slipped to 72 from 74 in February, according to data Tuesday that fell below the median estimate of 73 in a Bloomberg survey of economists. Readings above 50 indicate more builders view conditions as good than poor. Half of the responses were collected prior to March 4, according to the report.

The reading, still near a two-decade high, shows the industry was on solid footing just as the coronavirus began to spread faster across the country and menace the economy. Market turmoil has sent yields on government bonds that underpin home lending to record lows this month, reducing borrowing costs just as the economy grinds to a halt.

The measure of expected sales over the next six months fell to the lowest since September. The components that track the present sales of single-family homes and buyer traffic declined as well. Sentiment dimmed in the Northeast, South and West but was higher in the Midwest.

Some 21% of builders reported some supply disruption due to virus concerns in other countries such as China, NAHB Chief Economist Robert Dietz said in a statement.