The construction market for November shows a mixed basket of results in confidence and spending. According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released today, builder confidence in the market for newly built single-family homes edged one point lower in November from October, to 70. While residential construction spending as of September 2019 is up from the month prior, the rate dropped year-over-year, reports the U.S. Census Bureau (USCB) on November 1.

NAHB reports that confidence in the residential construction market was highest this year in September and October, which lines up with construction spending rates that gradually increased starting in June 2019, according to USCB’s survey.

“Single-family builders are currently reporting ongoing positive conditions, spurred in part by low mortgage rates and continued job growth,” said NAHB chairman Greg Ugalde, a home builder and developer from Torrington, Conn.  “In a further sign of solid demand, this is the fourth consecutive month where at least half of all builders surveyed have reported positive buyer traffic conditions.”

The USCB survey reported that the total seasonally adjusted annual rate for residential spending in September increased 0.6% from August 2019 to a rate of $517.9 billion but was down year-over-year from September 2018 by 3.5%. Of that total, the private sector, which consists of single-family and multifamily projects, saw a total increase of 0.6% from the August rate of $508.4 billion and a decrease of 3.6% from the September 2018 rate of $530.5 billion. Within the private sector, costs for new single-family homes were up 1.3% this month and down 4.9% for the year, while new multifamily home costs were down this month by 0.7% and up for the year by 0.9%.

While confidence is significantly higher than last year according to NAHB chief economist Robert Dietz, builders still struggle with several factors that negatively affect the market, including lack of labor and regulatory constraints.
The HMI index gauging current sales conditions fell two points to 76 and the measure charting traffic of prospective buyers dropped one point to 53. The component measuring sales expectations for the next six months rose one point to 77.

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