Home builder sentiment strong at year’s end

builderWashington DC – Despite inflation concerns and ongoing manufacturing bottlenecks, homebuilders’ confidence rose for the fourth straight month on strong consumer demand and limited existing inventory, according to the National Association of Home Builders (NAHB).

According to the NAHB/Wells Fargo Housing Market Index (HMI) released today, builder sentiment in the newly built single-family home market rose one point to 84 in December, matching the year’s highest reading recorded in February. published.

“While demand remains strong, finding employees, forecasting prices and dealing with material delays remains challenging,” said Chuck Fowke, president of NAHB. “Policymakers need to work to improve supply chains and manage expensive inflation. Tackling timber tariffs would be a good start.”

“The most pressing problem for the housing sector remains a lack of inventory,” said Robert Dietz, NAHB’s chief economist. “Building has increased, but the industry faces constraints, namely cost/availability of materials, labor and lots. And while single-family home starts in 2021 are expected to end the year 24% higher than pre-Covid-19 2019 levels, we expect higher interest rates to dampen home affordability in 2022.”

Derived from a monthly survey that NAHB has been conducting for 35 years, the NAHB/Wells Fargo HMI polls builders’ 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 potential buyer traffic as “high to very high,” “medium,” or “low to very low.” The scores for each component are then used to calculate a seasonally adjusted index, with any number above 50 indicating that more builders view the conditions as good than bad.

According to NAHB, the HMI index that measures current sales conditions rose one point to 90 and the meter that charts the traffic of potential buyers also gained one point to 70. The component that measures sales expectations in the next six months , remained stable for the third consecutive month at 84.

Looking at the three-month moving averages for regional HMI scores, the Northeast rose four points to 74, the Midwest gained two points to 74, and the South and West each posted a three-point increase to 87, respectively.

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