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Builder confidence surged in November despite supply-side challenges, marking the third monthly increase in a row, the National Association of Home Builders reported, citing the latest NAHB/Wells Fargo Housing Market Index.
November’s reading of 83 was up three points from October, driven by low existing inventories and strong buyer demand, the NAHB said in a press release.
The index’s measure of current sales conditions also showed builder optimism, rising three points to 89, while the six-month sales-expectations measurement was flat at 84. The buyer-traffic component rose three points to 68.
Regionally, the three-month moving average of the index jumped four points each in the South and the Midwest to 84 and 72, respectively, while it rose one point to 84 in the West. The reading was down two points to 70 in the Northeast
The NAHB/Wells Fargo survey measures builder perceptions of current single-family home sales, as well as 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.” The results are then used to calculate a seasonally adjusted index in which any number over 50 indicates that more builders view conditions as good than poor.
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Home Builder Confidence
For the third straight month, the level of builder confidence in the new home market set a record high. The National Association of Home Builders (NAHB) said the Housing Market Index (HMI) it co-sponsors with Wells Fargo soared 5 points in November to 90. This is the highest level in the 35-year history of the HMI which set records of 83 in September and 85 in October. These are the only times in its history that the Index surpassed the 80-point level and is triple its level in April when the pandemic caused it to plunge.
NAHB cautioned, however, that 69 percent of the survey responses were received before the results of the presidential election were called on Nov. 7. The election results and their future impacts on housing market conditions will be more fully reflected in December’s HMI report.
Boston Real Estate and Low-Interest Rates
Robert Dietz, NAHB chief economist, said that builder confidence has soared because historically low mortgage rates, favorable demographics, and an ongoing buyer preference for the suburbs have spurred demand and raised new home sales by nearly 17 percent year-over-year. He added, “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.
source: www.mortgagenewsdaily.com/11172020_nahb_builder_confidence.asp
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