Strong Demand Boosts Home Builder Confidence Despite Supply Chain Disruptions

The National Association of Home Builders said strong consumer demand helped push builder confidence higher in October, despite growing affordability challenges stemming from rising material prices and shortages.

The NAHB/Wells Fargo Housing Market Index said builder sentiment in the market for newly built single-family homes moved four points higher to 80 in October. All three major HMI indices posted gains in October: the index gauging current sales conditions rose five points to 87, the component measuring sales expectations in the next six months posted a three-point gain to 84 and the gauge charting traffic of prospective buyers moved four points higher to 65.

Regional three-month moving averages showed the Midwest rose one point to 69, the Northeast held steady at 72, the South and West each remained unchanged at 80 and 83, respectively.

“Builders are getting increasingly concerned about affordability hurdles ahead for most buyers,” said NAHB Chief Economist Robert Dietz. “Building material price increases and bottlenecks persist and interest rates are expected to rise in coming months as the Fed begins to taper its purchase of U.S. Treasuries and mortgage-backed debt. Policymakers must focus on fixing the broken supply chain. This will spur more construction and help ease upward pressure on home prices.”

“Although demand and home sales remain strong, builders continue to grapple with ongoing supply chain disruptions and labor shortages that are delaying completion times and putting upward pressure on building material and home prices,” said NAHB Chairman Chuck Fowke.

Any number over 50 indicates that more builders view conditions as good than poor.