Market newcomers are keeping housing demand firm
Homebuilders in the newly built single-family sector remained confident in the market in September amid a decline in the cost of some materials and continued firm demand.
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) read 67 in September, remaining unchanged from August.
“Despite rising affordability concerns, builders continue to report firm demand for housing, especially as millennials and other newcomers enter the market,” NAHB Chairman Randy Noel said. “The recent decline in lumber prices from record-high levels earlier this summer is also welcome relief, although builders still need to manage construction costs to keep homes competitively priced.”
The HMI metric measuring current sales conditions rose one point to 74, while the index gauging expectations in the next six months increased two points to 74. The component charting buyer traffic held steady at 49.
“A growing economy and rising incomes combined with increasing household formations should boost demand for new single-family homes moving forward,” NAHB Chief Economist Robert Dietz said. “However, housing affordability is becoming a challenge, as builders face overly burdensome regulations and rising material costs exacerbated by an escalating trade skirmish. Interest rates are also forecasted to keep rising.”
Changes in the three-month moving averages for regional HMI scores were mixed. The Northeast rose one point to 54 and the South remained unchanged at 70. The West edged down a single point to 73 and the Midwest fell three points to 59.
