Association of the Wall and Ceiling Industry Logo

Builder Confidence: High Demand Offsets Higher Costs—for Now

Strong buyer demand helped offset supply chain challenges and a surge in lumber prices as builder confidence in the market for newly built single-family homes inched up one point to 84 in February, according to the National Association of Home Builders/Wells Fargo Housing Market Index released Feb. 17.

    

“Lumber prices have been steadily rising this year and hit a record high in mid-February, adding thousands of dollars to the cost of a new home and causing some builders to abruptly halt projects at a time when inventories are already at all-time lows,” said NAHB Chairman Chuck Fowke, a custom home builder from Tampa, Fla. “Builders remain very focused on regulatory and other policy issues that could price out households seeking new homes in a tight market this year.”

    

“Demand conditions remain solid due to demographics, low mortgage rates and the suburban shift to lower cost markets, but we expect to see some cooling in growth rates for residential construction in 2021 due to cost factors, supply chain issues and regulatory risks,” said NAHB Chief Economist Robert Dietz. “Some builders are at capacity and may not be able to expand production due to these headwinds.”

    

Derived from a monthly survey that NAHB has been conducting for 35 years, 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.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

    

The HMI index gauging current sales conditions held steady at 90, while the component measuring sales expectations in the next six months fell three points to 80. The gauge charting traffic of prospective buyers rose four points to 72.

    

Looking at the three-month moving averages for regional HMI scores, the Northeast rose two points to 78, the Midwest fell one point to 81, the South dropped two points to 84 and the West posted a two-point loss to 93.

Browse Similar Articles

You May Also Like

New research has ranked the United States’ most populated industries and estimated what their pay could look like in 2033, in line with inflation, and the results are surprising.
A composite image made of a silhouette of the United States covered in grass.

U.S. Green Building Council Announces Top 10 U.S. States for Green Building in 2023The U.S. Green Building Council has released its annual list of Top 10 States for LEED. For

AWCI's Construction Dimensions cover

Renew or Subscribe Today!