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Builder Confidence Soars

by Kelly Leighton on

With the real estate market so busy right now, homebuilders are feeling very positive about the single-family home market.

Homebuilder confidence in the single-family home market tied its highest number, which was last seen in December 1988, in the 35-year history of the National Association of Home Builders/Wells Fargo Housing Market Index. It found builders’ confidence level to be 78, a six-point jump from July. Anything higher than 50 is considered a positive score. Comparatively, in April, in the midst of the first wave of the coronavirus pandemic, the score dipped to just 30.

“Housing has clearly been a bright spot during the pandemic and the sharp rebound in builder confidence over the summer has led NAHB to upgrade its forecast for single-family starts, which are now projected to show only a slight decline for 2020,” said NAHB Chief Economist Robert Dietz. “Single-family construction is benefiting from low interest rates and a noticeable suburban shift in housing demand to suburbs, exurbs and rural markets as renters and buyers seek out more affordable, lower density markets.”

In the Northeast, the index was 77 for August, up 7 points from July, and up 58 points from April. Comparatively, the Northeast’s HMI from August 2019 was 57.

The South saw the highest confidence, at 88, but did only dip to 32 in April.

However, the burst of activity is not without challenges, as the price of lumber has increased by up to 60% due to increased demand.

“The demand for new single-family homes continues to be strong, as low interest rates and a focus on the importance of housing has stoked buyer traffic to all-time highs as measured on the HMI,” said NAHB Chairman Chuck Fowke. “However, the V-shaped recovery for housing has produced a staggering increase for lumber prices, which have more than doubled since mid-April. Such cost increases could dampen momentum in the housing market this fall, despite historically low interest rates.”


Homebuilders National Association of Home Builders HMI
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