Homebuilder Confidence Rises to a Six-Month High, NAHB Survey Finds
Homebuilder confidence rose in November, the third consecutive month of gains, despite supply-chain problems that slowed deliveries and inflation that made building material more expensive.
An index measuring homebuilder sentiment rose to 83, an increase of three points from October, according to the National Association of Home Builders/Wells Fargo Housing Market Index released Tuesday. The index had reached a record high a year ago, as low mortgage rates boosted housing demand, before declining to a 13-month low in August.
Builders are more optimistic even as they grapple with labor shortages, rising interest rates, and a shortage of building lots, said Robert Dietz, NAHB’s chief economist.
“In addition to well-publicized concerns over building materials and the national supply chain, labor and building-lot access are key constraints for housing supply,” Dietz said. “Lot availability is at multi-decade lows and the construction industry currently has more than 330,000 open positions. Policymakers need to focus on resolving these issues to help builders produce more housing to meet strong market demand.”
A subset of the NAHB data showing current sales conditions increased by three points to 89, while a measure of sales expectations in the next six months remained steady at 84, according to NAHB data. An index measuring traffic of prospective buyers rose by three points to 68.
“The solid market for home building continued in November despite ongoing supply-side challenges,” said Chuck Fowke, NAHB chairman. “Lack of resale inventory combined with strong consumer demand continues to boost single-family home building.”
Measured by region, the Northeast reported its level of confidence declined by two points to 70. The Midwest rose by four points to 72, while the South increased by four points to 84 and the West gained by one point to 84.
The eagerness of consumers to buy homes is lifting the optimism of homebuilders, even with the pandemic-era problems they face with material prices and availability, said Greg McBride, chief financial analyst for Bankrate, a New York-based financial data company.
“Builder confidence increased because the level of buyer demand remains high amid limited inventory,” McBride said. “The challenges of obtaining materials and finding enough workers to fill needed positions are ongoing, but the backdrop of strong demand bodes well for homebuilders.”