Homebuilders’ Confidence Rises on Abnormally Strong Demand for the Season »RealtyBizNews: Real Estate News

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Homebuilders are feeling increasingly confident as the New Year approaches thanks to strong seasonal demand at a typically much slower time of year.

Builder sentiment in the single-family housing market rose one point to 84 in December, according to the National Association of Home Builders / Wells Fargo Housing Market Index. This represents the fourth consecutive monthly increase and the highest score since February of this year.

Experts say any score above 50 is considered a positive feeling, so it’s clear from the HMI that the automaker is feeling extremely optimistic overall.

The increased confidence comes amid a number of concerns from builders over issues such as inflation, supply chain disruption, rising costs of building materials and labor shortages. current. According to the most recent Producer Price Index, the cost of wall panels, steel, aluminum and plastic building products all increased in November.

Chuck Fowke, president of the NAHB, told media that the incredibly high demand from buyers was enough to get past all of these concerns.

Indeed, home builders benefit from a historically low supply of existing homes for sale. At the same time, it is not only potential home buyers, but also investors who are scrambling to get their hands on new construction. The so-called rental construction industry is growing rapidly, and the number of single-family homes built exclusively for renting reached its highest quarterly level on record in the third quarter of the year.

Still, builders would do well to note that the unprecedented demand they are currently seeing may not continue until 2022.

“While 2021 single-family home starts are expected to end the year 24% higher than pre-COVID 2019 levels, we expect higher interest rates in 2022 to hurt the affordability of the country. housing, “warned Robert Dietz, chief economist of the NAHB.

There are three components that make up the HMI index. Current selling conditions increased by one point to 90, while buyer traffic also increased by one point to 70. However, sales expectations over the next six months remained unchanged for the third consecutive month at 84 points.

A review of three-month mobile average regional HMI scores shows that builders in the Southern and Western regions are the most optimistic of all. There, the HMI increased by three points to reach 87 in total. In the Northeast, the index rose four points to 74, while the Midwest saw a two-point increase to an overall score of 74.

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