Homebuilder confidence in the single-family housing market fell for the first time in seven months during the month of April, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index report.
NAHB says builder confidence fell three notches to a score of 25 on the index after it remained flat in March.
A score of 50 or above suggests more homebuilders see the market as improving or good, while a score under 50 indicates a general pessimism about the strength of the market.
The fall in confidence brings the index back to where it was in January, which was the highest level reached in five years.
"Although builders in many markets are noting increased interest among potential buyers, consumers are still very hesitant to go forward with a purchase, and our members are realigning their expectations somewhat until they see more actual signed sales contracts," said Barry Rutenberg, chairman of the National Association of Home Builders.
NAHB said builder confidence began to pick up last September, but interest expressed by buyers in the past few months failed to translate into expected sales activity.
Some of the issues plaguing homebuilder confidence include tight credit conditions for both builders and buyers, competition from distressed homes and difficulties in obtaining accurate appraisals, NAHB said.