Home Builder Confidence Reaches New High

Home builder confidence reached new heights yet again this month. For the third time in three months, builder confidence in the single-family home sector hit an all-time high. The National Association of Home Builders’ Wells Fargo Housing Market Index recorded builder sentiment as a 90 this month. Anything over 50 is deemed positive. To put it into perspective, one year ago during this time, the index hit 71. In April of this year, the index dropped to 30. According to CNBC, this historic level of happiness is a result of low mortgage rates, the suburban shift, and favorable demographics.

“Historically low mortgage rates, favorable demographics and an ongoing suburban shift for home buyer preferences have spurred demand and increased new home sales by nearly 17% in 2020 on a year-to-date basis,” said NAHB Chairman Chuck Fowke, a custom homebuilder from Tampa, Florida. “Though builders continue to sign sales contracts at a solid pace, lot and material availability is holding back some building activity. Looking ahead to next year, regulatory policy risk will be a key concern given these supply-side constraints.”

Of the index’s three components, current sales conditions rose 6 points to 96. Sales expectations in the next six months increased 1 point to 89 and buyer traffic rose 3 points to 77.

The NAHB noted that 69% of the responses for the November survey were received before the election for president was called by the media on Nov. 7. The election results, therefore, and their impact on builder sentiment, will be reflected more fully in December’s HMI report.

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