Despite inflation concerns and ongoing production bottlenecks, builder confidence edged higher for the fourth consecutive month on strong consumer demand and limited existing inventory, reports the NAHB.
The NAHB/Wells Fargo Housing Market Index (HMI), measuring builder sentiment in the market for newly built single-family homes, moved one point higher to 84 in December, tying the highest reading of the year that was posted in February. In this seasonally adjusted index, any number above 50 indicates that more builders view conditions as good than poor.
“While demand remains strong, finding workers, predicting pricing, and dealing with material delays remains a challenge,” says NAHB chairman Chuck Fowke. “Policymakers need to work on supply chain improvements and controlling costly inflation. Addressing lumber tariffs would be a good place to start.”
The HMI index gauging current sales conditions rose one point to 90, and the gauge charting traffic of prospective buyers also posted a one-point gain to 70. The component measuring sales expectations in the next six months held steady for the third consecutive month at 84.
Looking at the three-month moving regional scores, the Northeast rose four points to 74, the Midwest posted a two-point gain to 74, and the South and West each posted a three-point rise to 87, respectively.
“The most pressing issue for the housing sector remains lack of inventory,” says NAHB chief economist Robert Dietz. “Building has increased, but the industry faces constraints, namely cost/availability of materials, labor, and lots. And while 2021 single-family starts are expected to end the year 24% higher than the pre-COVID 2019 level, we expect higher interest rates in 2022 will put a damper on housing affordability.”
