Monday, May 17, 2021

NAHB: Builder Confidence Unchanged at 83 in May

by Calculated Risk on 5/17/2021 10:04:00 AM

The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 83, unchanged from 83 in April. Any number above 50 indicates that more builders view sales conditions as good than poor.

From the NAHB: Building Materials Top Housing Concerns

Builder confidence held stable in May, despite growing concerns over the price and availability of most building materials, including lumber. The latest NAHB/Wells Fargo Housing Market Index (HMI) released today shows that builder confidence in the market for newly built single-family homes is 83 in May, unchanged from April.

“Builder confidence in the market remains strong due to a lack of resale inventory, low mortgage interest rates, and a growing demographic of prospective home buyers,” said NAHB Chairman Chuck Fowke. “However, first-time and first-generation home buyers are particularly at risk for losing a purchase due to cost hikes associated with increasingly scarce material availability. Policymakers must take note and find ways to increase production of domestic building materials, including lumber and steel, and suspend tariffs on imports of construction materials.”

“Low interest rates are supporting housing affordability in a market where the cost of most materials is rising,” said NAHB Chief Economist Robert Dietz. “In recent months, aggregate residential construction material costs were up 12% year over year, and our surveys suggest those costs are rising further. Some builders are slowing sales to manage their own supply chains, which means growing affordability challenges for a market in critical need of more inventory.”
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The HMI index gauging current sales conditions held steady at 88, and the gauge charting sales expectations in the next six months rose one point to 81. The component measuring traffic of prospective buyers fell one point to 73.

Looking at the three-month moving averages for regional HMI scores, the South rose one point to 84, and the West held steady at 90. The Northeast fell four points to 82, and the Midwest posted a three-point drop to 75.
NAHB HMI Click on graph for larger image.

This graph show the NAHB index since Jan 1985.

This was at the consensus forecast, and a very strong reading.

Housing and homebuilding have been one of the best performing sectors during the pandemic.