Building material cost challenges ease, but shortage continues to cause problems
Following three months of decline, builder confidence improved in September as lumber prices eased and demand for new homes remained strong.
The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) showed that builder sentiment in the market for newly-built single-family homes inched up one point to 76 in September.
“Builder sentiment has been gradually cooling since the HMI hit an all-time high reading of 90 last November,” said NAHB chairman Chuck Fowke. “The September data shows stability as some building material cost challenges ease, particularly for softwood lumber.”
However, Fowke said that the chronic construction labor shortage remains an issue, pushing delivery times longer.
“The single-family building market has moved off the unsustainably hot pace of construction of last fall and has reached a still hot but more stable level of activity, as reflected in the September HMI,” said NAHB chief economist Robert Dietz. “While building material challenges persist, the rate of cost growth has eased for some products, but the job openings rate in construction is trending higher.”
The index gauging current sales conditions increased one point to 82, the component measuring traffic of prospective buyers was up two points to 61, and the gauge charting sales expectations in the next six months the same at 81.
Builder outlook in Northeast, South, and West regions were down two points to 72, 80, and 83, respectively. The Midwest held steady at 68.
“Regionally, we continue to see growth in the South and the West, particularly the Mountain West,” Dietz said. “Exurban markets have expanded the most over the last year, although inner suburbs are now experiencing an acceleration, with townhouse construction having had the best quarter in 14 years this spring.”