Builder confidence grew in October despite market challenges such as dwindling affordability due to increasing supply pricing and ongoing shortages. For single-family homes, builder sentiment increased four points to 80, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released today.
The NAHB/Wells Fargo 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.” Each score is then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
– Across all HMI indices, October saw gains
– The index measuring sales conditions increased five points to 87
– The index forecasting sales for the next six months experienced a three-point increased to 84
– The index looking at traffic of potential buyers increased four points to 65
Regionally, on a three-month moving scale for regional HMI scores, the Midwest increased one point to 69, the Northeast held steady at 72, the South and West each remained unchanged at 80 and 83, respectively.
“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 in a statement.
“Builders are getting increasingly concerned about affordability hurdles ahead for most buyers,” said NAHB Chief Economist Robert Dietz in a statement. “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.”