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As Housing Demand Grows, Builder Confidence Finds Stability

in Daily Dose, Data, Featured, Headlines, journal, News July 17, 2018 2,752 Views

The July National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released by the National Association of Home Builders (NAHB), has reported a builder confidence in the market for newly-built single-family homes as unchanged from June, remaining at a solid 68.

“Builders are encouraged by growing housing demand, but they continue to be burdened by rising construction material costs,” said NAHB Chief Economist Robert Dietz. “Builders need to manage these cost increases as they strive to provide competitively priced homes, especially as more first-time home buyers enter the housing market.”

While not a sign of direct growth, the stabilization of the HMI index is a positive move from the previous month-over-month slip to 68 points from 70 in May. According to the NAHB, rising costs of imported lumber from Canada, as well as increasing raw material tariffs for construction, were some of the key factors that impacted builder confidence in the June report. 

“Consumer demand for single-family homes is holding strong this summer, buoyed by steady job growth, income gains, and low unemployment in many parts of the country,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, Louisiana.

The NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair,” or “poor.” The survey, which has been collecting data for the past 30 years, also asks builders to rate traffic of prospective buyers as “high to very high,” “average,” or “low to very low.” The scores for each component are then used to calculate a seasonally adjusted index, where any number over 50 indicates that more builders view conditions as "good" rather than "poor."

The HMI index measuring current sales conditions remained unchanged at 74. Meanwhile, the component gauging expectations in the next six months dropped two points to 73, and the metric charting buyer traffic rose two points to 52.

For the three-month moving averages for regional HMI scores, the report noted that the Northeast rose one point to 57, while the Midwest remained unchanged at 65, though the West and South each fell one point to 75 and 70, respectively.

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About Author: Kristina Brewer

Kristina Brewer is the Editorial Assistant of Publications for the Five Star Institute, including DS News and MReport magazine. She is a graduate of the University of North Texas (UNT), where she received her Bachelor of Arts in English with a concentration in rhetoric and writing and a minor in global marketing. During this time, she served as Director of Philanthropy in the national women’s fraternity Zeta Tau Alpha, of which she is an alumna. Her passion for philanthropy continued after university when she was an intern at Keep Denton Beautiful, a local partner of Keep America Beautiful, where she drove membership, organized events, and led social media campaigns. Brewer honed her writing at the North Texas Daily, UNT’s student-run newspaper where she wrote about faculty, mentorship, and student life. Brewer also previously worked at Optimus Business Plans where she helped start-ups create funding proposals, risk assessments, and management plans.
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