Fundamentals may be strong but building is a challenge
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The labor market is robust, interest rates are low, but builder sentiment remains dogged by affordability issues and a lack of workers and lots.
The latest reading of builder sentiment shows a slight improvement for the spring housing market but remains subdued amid concern over the medium-term market.
For March, the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) edged 1 point higher to 63, continuing the trend of scores in the low 60s seen in recent months.
“Builders report solid demand for new single-family homes but they are also grappling with affordability concerns stemming from a chronic shortage of construction workers and buildable lots,” said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn.
Of the components that make up the index, current conditions increased 1 point to 69, prospective-buyer traffic was up 3 points to 47, but expectation for the next 6 months slipped 1 point to 71.
Home builder confidence rose one point to 63 in April in the latest NAHB/@WellsFargo Housing Market Index (HMI). “Builders report solid demand for new single-family homes but they are also grappling with affordability concerns."- NAHB Chairman Greg Ugalde. https://t.co/XHfPzYp5iD pic.twitter.com/r0aUs2IeLe
— NAHB (@NAHBhome) April 16, 2019
Regional variations
The 3-month moving averages for regional HMI scores saw a 3-point gain for the Northeast to 51, the Midwest increased two points to 53, and the South was up one point to 67. The West remained unchanged at 69.
“Ongoing job growth, favorable demographics and a low-interest rate environment will help to modestly spark sales growth in the near term,” said NAHB Chief Economist Robert Dietz. “However, supply-side headwinds that are putting upward pressure on housing costs will limit more robust growth in the housing market.”
