Single-family builders report favorable conditions despite affordability headwinds

Builder sentiment for newly-built single-family homes weakened slightly in November but remained high overall, according to the National Association of Home Builders.

The NAHB/Wells Fargo Housing Market Index (HMI) fell one point to 70 in November.

“We have seen substantial year-over-year improvement following the housing affordability crunch of late 2018 when the HMI stood at 60,” said NAHB Chief Economist Robert Dietz. “However, lot shortages remain a serious problem, particularly among custom builders. Builders also continue to grapple with other affordability headwinds, including a lack of labor and regulatory constraints.”

The HMI index measuring sales expectations in the next six months increased one point to 77. However, current sales conditions edged two points down to 76, while the traffic of prospective buyers dipped one point to 53.

On a regional basis, the Northeast saw a two-point gain to 62, the West moved three points higher to 81, and the South climbed one point to 74. Only the Midwest remained unchanged at 58.

“Single-family builders are currently reporting ongoing positive conditions, spurred in part by low mortgage rates and continued job growth,” NAHB Chairman Greg Ugalde said. “In a further sign of solid demand, this is the fourth consecutive month where at least half of all builders surveyed have reported positive buyer traffic conditions.”