Despite mounting affordability challenges, and requisite rising material prices and shortages, ongoing strong consumer demand is pushing builder confidence higher, according to the NAHB.
The NAHB/Wells Fargo Housing Market Index, measuring builder sentiment in the market for newly built single-family homes, rose four points to 80 in October. In this seasonally adjusted index, any number above 50 indicates that more builders view conditions in the single-family home market as fair than as poor.
“Although demand and home sales remain strong, builders continue to grapple with ongoing supply chain disruptions and labor shortages that are delaying completion times and putting upward pressure on building material and home prices,” says NAHB chairman Chuck Fowke.
All three of the major HMI indices rose in October. The index gauging current sales conditions rose five points to 87, the index measuring sales expectations for the next three months rose three points to 84, and the index charting traffic of prospective buyers rose four points to 65.
The three-month moving average regional HMI score for the Midwest rose one point to 69. On the same metric, the Northeast, the South, and the West remained unchanged at 72, 80, and 83, respectively.
“Builders are getting increasingly concerned about affordability hurdles ahead for most buyers,” says NAHB chief economist Robert Dietz. “Building material price increases and bottlenecks persist and interest rates are expected to rise in coming months as the Fed begins to taper its purchase of U.S. Treasuries and mortgage-backed debt. Policymakers must focus on fixing the broken supply chain. This will spur more construction and help ease upward pressure on home prices.”
