Homebuilder Confidence Hits All-Time High


Strong demand for housing across the country combined with a limited inventory of available homes and strong sales figures to shatter the prior homebuilder confidence record set just last month.
Builder confidence in the market for new-build single-family homes jumped five points from 85 – the previous record set in October – to 90 in November’s edition of the NAHB/Wells Fargo Housing Market Index, the National Association of Homebuilders reported.

“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 percent in 2020 on a year-to-date basis,” NAHB Chairman Chuck Fowke said in a statement. “Though builders continue to sign sales contracts at a solid pace, lot and material availability is holding back some building activity. Looking ahead to next year, regulatory policy risk will be a key concern given these supply-side constraints.”

Derived from a monthly survey that NAHB has been conducting for 35 years, the HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

“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,” NAHB Chief Economist Robert Dietz said in a statement. “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.”