The National Association of Home Builders (NAHB)/Wells
Fargo Housing Market Index (HMI) set a new high this month, breaking a record
that it set only 30 days earlier. The Index, a measure of builder confidence in
the new home market, rose 5 points to 83 in September. A 6-point increase in
August had shot the Index to 78, tying it with the previous high set in
December 1988.

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,” said NAHB Chairman Chuck Fowke. “More domestic
lumber production or tariff relief is needed to avoid a slowdown in the market
in the coming months.”

Lumber prices are now up more than 170 percent since mid-April, adding more
than $16,000 to the price of a typical new single-family home,” said 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.”

Derived from a monthly survey that NAHB has been conducting for 35 years,
the Index gauges builder perceptions of current single-family home sales and
sales expectations for the next six months as “good,” “fair” or “poor.” The
survey also asks builders to rate traffic of prospective buyers as “high to
very high,” “average” or “low to very low.” Scores for each component are then
used to calculate a seasonally adjusted index where any number over 50
indicates that more builders view conditions as good than poor.

The components of the Index all established new highs in September. The component
gauging current sales conditions rose 4 points to 88, the one measuring sales
expectations in the next six months increased 6 points to 84 and the measure
charting traffic of prospective buyers posted a 9-point gain to 73.

Regional scores are reported as three-month moving averages. The HMI in the
Northeast increased 11 points to 76, the Midwest increased 9 points to 72, the
South rose 8 points to 79 and the West increased 7 points to 85.

By Jann Swanson , dated 2020-09-16 16:22:23

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Courtesy of Mortgage News Daily

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