September Home Builder Confidence Hits Record High
After a steep drop in April at the onset of the coronavirus pandemic, builder confidence has soared to record highs, according to the National Association of Home Builders.
The NAHB/Wells Fargo Housing Market Index reported builder confidence in the market for newly built single-family homes increased by five points to a record 83 in September, easily eclipsing the previous highest reading of 78 in the 35-year history of the series set last month and matched in December 1998.
Every HMI index posted their highest readings in September. The HMI index gauging current sales conditions rose four points to 88; the component measuring sales expectations in the next six months increased six points to 84; and the measure charting traffic of prospective buyers posted a nine-point gain to 73.
Looking at the three-month moving averages for regional HMI scores, the Northeast increased 11 points to 76, the Midwest increased nine points to 72, the South rose eight points to 79 and the West increased seven points to 85.
NAHB Chairman Chuck Fowke said the record numbers is a strong signal that housing is leading the economic recovery. “Historic traffic numbers have builders seeing positive market conditions, but many in the industry are worried about rising costs and delays for building materials, especially lumber,” he said.
NAHB cautioned, however, that more domestic lumber production or tariff relief is needed to avoid a slowdown in the market in the coming months.
“Lumber prices are now up more than 170% since mid-April, adding more than $16,000 to the price of a typical new single-family home,” said NAHB Chief Economist Robert Dietz. “That said, the suburban shift for home building is keeping builders busy, supported on the demand side by low interest rates. In another sign of this growing trend, builders in other parts of the country have reported receiving calls from customers in high-density markets asking about relocating.”