Builder confidence in the market for new single-family homes has risen by two points to an all-time high of 85 on the NAHB/Wells Fargo Housing Market Index in October, up from the previous all-time high of 83 recorded in September. September and October mark the first two months with readings above 80 in the index’s history.
“Traffic remains high and record-low interest rates are keeping demand strong as the concept of ‘home’ has taken on renewed importance for work, study, and other purposes in the COVID era,” says NAHB chairman Chuck Fowke. “However, it is becoming increasingly challenging to build affordable homes as shortages of lots, labor, lumber, and other key building materials are lengthening construction times.”
The NAHB/Wells Fargo HMI gauges builders’ views of current single-family homes sales conditions or expectations based on a monthly survey, with any reading above a 50 indicating that more builders view industry conditions as good rather than poor.
All of the individual housing market indices either posted or matched their highest-ever readings in October. The index gauging current sales conditions rose two points to 90; the index measuring sales expectations for the next six months rose three points to 88, and the index measuring prospective buyer traffic remained at 74.
In the three-month averages for regional HMI scores, the Northeast rose by six points to 82, the Midwest rose by three points to 75, the South rose by three points to 82, and the West rose by five points to 90.
“The housing market continues to be a bright spot for the economy, supported by increased buyer interest in the suburbs, exurbs, and small towns,” says NAHB chief economist Robert Dietz. “NAHB analysis published last week showed that new single-family home sales are outpacing starts by a historic margin. Bridging this gap will require either a gain in construction volume or reductions in available inventory, which is already at a historic low in terms of month’s supply.”