SPDR S&P Homebuilders ETF (NYSEArca: XHB) and iShares Dow Jones US Home Construction Index ETF (NYSEArca: ITB) slipped 5% on Monday following a report that homebuilder confidence declined to its lowest level in six months.

The National Association of Home Builders/Wells Fargo Housing Market Index fell in April for the third straight month.

“Many builders are expressing frustration over being unable to respond to the rising demand for new homes due to difficulties in obtaining construction credit, overly restrictive mortgage lending rules and construction costs that are increasing at a faster pace than appraised values,” said NABH Chairman Rick Judson. “While sales conditions are generally improving, these challenges are holding back new building and job creation.”

The decline in the homebuilder index surprised economists who had expected confidence to rise.

The homebuilder ETFs could see more action Tuesday with the release of data on March housing starts.

“Although the pace of the housing market recovery is gaining momentum, it is important to keep in mind that we are still in the early stages of the recovery, and there’s a long way to go before the industry reaches normalized activity levels,” said KB Home (NYSE: KBH) CEO Jeffrey Mezger during a recent earnings call, Bloomberg News reports.

iShares Dow Jones US Home Construction Index ETF

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