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A Rise In Home Builder Confidence

  • May 26, 2020
  • Blog
  • 0
A Rise In Home Builder Confidence

According to the current NAHB/Wells Fargo Housing Market Index (HMI) builder confidence is up for newly-built single-family homes to 37, a seven-point increase, this month. The confidence stems from the slow but steady stabilizing and rising of the housing market among the COVID-19 crisis.

“The fact that most states classified housing as an essential business during this crisis helped to keep many residential construction workers on the job, and this is reflected in our latest builder survey,” said NAHB Chairman Dean Mon. “At the same time, builders are showing flexibility in this new business environment by making sure buyers have the knowledge and access to the homes they are seeking through innovative measures such as social media, virtual tours and online closings.”

“Low interest rates are helping to sustain demand,” said NAHB Chief Economist Robert Dietz. “As many states and localities across the nation lift stay-at-home orders and more furloughed workers return to their jobs, we expect this demand will strengthen. Other indicators that suggest a housing rebound include mortgage application data that has posted four weeks of gains and signs that buyer traffic has improved in housing markets in recent weeks. However, high unemployment and supply-side challenges including builder loan access and building material availability are near-term limiting factors.”

The NAHB/Wells Fargo HMI measures builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” Builders are also surveyed on the traffic of prospective buyers. They can rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” The HMI can range between 0 and 100 with 0 being the worst and 100 being the best.

The index reported gains this month can be seen in current sales conditions with an increase of six points to 42, sales expectations jumped 10 points to 46 and traffic of prospective buyers rose 8 points to 21. The HMI monthly average scores climbed the highest in the West with a 12 point gain to 44, the South had an 8 point gain to 42 and the Midwest gained seven points to 32.

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