Strong sales trends continue to perk builders up
The nation’s homebuilders are still on cloud nine as they posted a record-breaking increase in confidence levels last month, according to the latest NAHB/Wells Fargo Housing Market Index (HMI).
In November, builder optimism for newly-built single-family homes soared five points to 90, shattering the all-time high of 85 set in October.
“Historically low mortgage rates, favorable demographics and an ongoing suburban shift for home buyer preferences have spurred demand and increased new home sales by nearly 17% in 2020 on a year-to-date basis,” said NAHB Chairman Chuck Fowke. “Though builders continue to sign sales contracts at a solid pace, lot and material availability are holding back some building activity. Looking ahead to next year, regulatory policy risk will be a key concern given these supply-side constraints.”
All the HMI indices hit an all-time high in November. The HMI index measuring current sales conditions jumped six points to 96, the component gauging sales expectations in the next six months inched up one point to 89, and the measure charting traffic of prospective buyers climbed three points to 77.
Regionally, the Northeast experienced a two-point gain to 83, the Midwest was up six points to 80, the South rose four points to 86, and the West increased four points to 94.
“Another record high for the HMI reflects that housing is a bright spot for the economy,” said NAHB Chief Economist Robert Dietz. “However, affordability remains an ongoing concern, as construction costs continue to rise and interest rates are expected to move higher as more positive news emerges on the coronavirus vaccine front. In the short run, the shift of housing demand to lower density markets such as suburbs and exurbs with ongoing low resale inventory levels is supporting demand for home building.”
NAHB noted that 69% of the responses for this survey were received before the election for president was called by the media on November 07. The election results, and their future impacts on housing market conditions, will be reflected more fully in December’s HMI report.
