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Builder Confidence Rallies

Builder confidence hit an eight-month high in November according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Confidence in the market for newly-built single-family homes jumped two points in November, hitting an HMI total of 70, the highest level, since March 2017.

The HMI is calculated based on a monthly survey that NAHB has been conducting for over three decades. It assigns a rating based on three component factors: builder perception of current single-family home sales, their expectations for sales over the next six months, and traffic of prospective buyers. Any rating over 50 indicates that more of the surveyed builders consider conditions to be “good” than “poor.”

For the month of November, builder perception of current sales increased two points to a rating of 77. Also on the rise was the rating for buyer traffic, which rose to 50. However, expectations for the next six months dipped slightly, dropping from 78 to 77.

Breaking things down to a more local level, the three-month moving average for the Northeast hit 54, up five points, and the South gained a point to settle in at 69. The West and Midwest held fast at their previous ratings of 77 and 63, respectively.

Builder confidence slid during the summer, with all three HMI components seeing losses in July 2017 and the overall HMI rating dropping to 64, which at the time was the lowest rating since November 2016. The HMI entered the year with a rating of 67 in January 2017.

While the new HMI report pinpoints several challenges currently facing builders, including labor shortages and the price increase of building materials, their outlook is still positive. According to the report:

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

For more information on the HMI, click here.

About Author: David Wharton

David Wharton has been a freelance writer and editor for over 13 years, contributing to publications such as The Daily Dot, CinemaBlend, ScreenRant, and Creative Screenwriting Magazine. He holds a B.A. in English from the University of Texas at Arlington. He lives in Texas with three children, four dogs, and his wife.

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