Builder confidence remains strong

Confidence in newly-built single-family homes remains high among builders.

The latest National Association of Home Builders/Wells Fargo Housing Market Index found the confidence level increased one point to 65 in July, the sixth month in a row that the level has remained steady. This can be thanks in part to demands, as builders said they remain firm. However, there are a few obstacles that are preventing the confidence level from rising.

“Even as builders try to rein in costs, home prices continue to outpace incomes,” said NAHB Chief Economist Robert Dietz. “The current low mortgage interest rate environment should be getting more buyers off the sidelines, but they remain hesitant due to affordability concerns. Still, attractive rates should help spur new home purchases in large metro suburban markets, where approximately one-third of new construction takes place.”

Yet, builders remain optimistic. Confidence in current sales conditions increased a point to 72 and the confidence level for the next six months predictions increased a point to 71. Buyer traffic also rose one point to 48. In the Northeast, the housing market index remained steady at 60, while the South and West each each rose one point, and the Midwest dropped a point.

“Builders report solid demand for single-family homes. However, they continue to grapple with labor shortages, a dearth of buildable lots and rising construction costs that are making it increasingly challenging to build homes at affordable price points relative to buyer incomes,” said NAHB Chairman Greg Ugalde.