Builder confidence rose by five points in September to an all-time high of 83 in the latest edition of the NAHB/Wells Fargo Housing Market Index. Last month’s reading of 78 had been the last highest in the history of the survey, matching a record set in December 1998.
“Historic traffic numbers have builders seeing positive market conditions, but many in the industry are worried about rising costs and delays for building materials, especially lumber,” says NAHB chairman Chuck Fowke, a custom home builder from Tampa, Fla. “More domestic lumber production or tariff relief is needed to avoid a slowdown in the market in the coming months.”
The HMI measures builder perceptions of current single-family home sales and sales expectations based on a monthly survey that the NAHB has conducted for 35 years. Scores across three components—current single-family home sales, sales expectations for the next six months, and traffic of prospective buyers—are used to calculate a seasonally adjusted index where any number above 50 indicates that more builders view industry conditions as good than as poor.
All three indices posted record highs in September at the national level. The index of current sales conditions rose four points to 88, the measure of sales expectations rose six points to 84, and the measure of traffic of prospective buyers rose nine points to 73.
At the regional level, the three-month moving average score for the Northeast rose by 11 points to 76. The same score rose by nine points to 72 in the Midwest, eight points to 79 in the South, and seven points to 85 in the West.
“Lumber prices are now up more than 170% since mid-April, adding more than $16,000 to the price of a typical new single-family home,” says NAHB chief economist Robert Dietz. “That said, the suburban shift for home building is keeping builders busy, supported on the demand side by low interest rates. In another sign of this growing trend, builders in other parts of the country have reported receiving calls from customers in high-density markets asking about relocating.”
