According to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), builder confidence for newly-built single-family homes rose one point to 68 in October. The levels have held in the upper 60s since June.

“Builders are motivated by solid housing demand, fueled by a growing economy and a generational low for unemployment,” says NAHB chairman Randy Noel. “Builders are also relieved that lumber prices have declined for three straight months from elevated levels earlier this summer, but they need to manage supply-side costs to keep home prices affordable.”

“Favorable economic conditions and demographic tailwinds should continue to support demand, but housing affordability has become a challenge due to ongoing price and interest rate increases,” says NAHB chief economist Robert Dietz. “Unless housing affordability stabilizes, the market risks losing additional momentum as we head into 2019.”

The HMI is derived from a monthly survey that gauges builder perspectives on sales and sales expectations of single-family home sales for the next six months. Builders rate sales expectations as “good,” “fair” or “poor,” and then rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores are used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

The index shows that current sales rose one point to 74, and expectations for the next six months rose to 75. The index for buyer traffic rose 4 points to 53.

The three-month regional scores were as follows; the Northeast rose three points to 57, the South rose one point to 71, the West remained at 74 and the Midwest dropped two points to 57.

Leave a Reply

Your email address will not be published. Required fields are marked *