Increasing builder confidence points to steady growth for housing market

While confidence is up, a lack of labor and higher material prices continue to constrain the single-family housing market

Increasing builder confidence points to steady growth for housing market
Confidence among builders in the newly built single-family home market increased to 70 in November, up two points from the previous month, according to the Housing Market Index (HMI) released by the National Association of Home Builders (NAHB) and Wells Fargo.

The November confidence level represents the highest since March.

“November’s builder confidence reading is close to a post-recession high — a strong indicator that the housing market continues to grow steadily,” NAHB Chairman Granger MacDonald said. “However, our members still face supply-side constraints, such as lot and labor shortages and ongoing building material price increases.”

Two of the index’s three components recorded increases during the month. The component measuring current sales conditions rose two points to 77, while the measure of buyer traffic also increased two points to 50. The only decrease was recorded in the measure of sales expectations in the next six months, which slipped one point to 77.

The three-month moving HMI average rose five points in the Northeast region to 54, the South region recorded a one point increase in its three-month average to 69. Averages for the West and Midwest were steady at 77 and 63, respectively.

“Demand for housing is increasing at a consistent pace, driven by job and economic growth, rising homeownership rates and limited housing inventory,” NAHB Chief Economist Robert Dietz said. “With these economic fundamentals in place, we should see continued upward movement of the single-family housing market as we close out 2017.”

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