Builder confidence has caught back up to the pre-pandemic level as of July. The housing market is in the lead to the U.S. economic recovery. According to the latest NAHB/Wells Fargo Housing Market Index (HMI) newly-built single-family homes rose from 14 points to 72 points in July.
The National Association of Home Builders started the NAHB/Wells Fargo HMI 30 years ago. It is a monthly survey that measures builder perceptions and asks respondents to rate market conditions for the sale of new homes at the present time and in the next six months as well as the traffic of prospective buyers of new homes. A panel of builders is chosen each month to rate present single-family sales, and single-family sales for the next six months on a scale of good, fair, or poor. They also rate traffic of prospective buyers on a scale of high to very high, average, or low to very low.
The HMI can range between 0 and 100. July has seen good numbers with current sales conditions at an HMI of 79, sales expectations in the next six months rose to 75 points and the measure charting traffic of prospective buyers was at 58.
“Builders are seeing strong traffic and lots of interest in new construction as existing home inventory remains lean,” said NAHB Chairman Chuck Fowke. “Moreover, builders in the Northeast and the Midwest are benefiting from demand that was sidelined during lockdowns in the spring. Low interest rates are also fueling demand, and we expect housing to lead an overall economic recovery.”
“While the housing market is clearly rebounding, challenges exist,” said NAHB Chief Economist Robert Dietz. “Lumber prices are at a two-year high and builders are reporting rising costs for other building materials while lot and skilled labor availability issues persist. Nonetheless, the important story of the changing geography of housing demand is benefiting new construction. New home demand is improving in lower density markets, including small metro areas, rural markets and large metro exurbs, as people seek out larger homes and anticipate more flexibility for telework in the years ahead. Flight to the suburbs is real.”
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