Builder Confidence at a 12-Year High

March 15, 2017 LBM Journal

The National Association of Home Builders reports that builder confidence in the market for newly-built single-family homes jumped six points to 71 on the NAHB/Wells Fargo Housing Market Index (HMI). This is the highest reading since June 2005.

“Builders are buoyed by President Trump’s actions on regulatory reform, particularly his recent executive order to rescind or revise the waters of the U.S. rule that affects permitting,” said NAHB Chairman Granger MacDonald.

“While builders are clearly confident, we expect some moderation in the index moving forward,” said NAHB Chief Economist Robert Dietz. “Builders continue to face a number of challenges, including rising material prices, higher mortgage rates, and shortages of lots and labor.”

Derived from a monthly survey that NAHB has been conducting for 30 years, the HMI 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.

All three HMI components posted robust gains in March. The component gauging current sales conditions increased seven points to 78 while the index charting sales expectations in the next six months rose five points to 78.  Meanwhile, the component measuring buyer traffic jumped eight points to 54.

Looking at the three-month moving averages for regional HMI scores, the Midwest increased three points to 68 and the South rose one point to 68. The West dipped three points to 76 and the Northeast edged one point lower to 48.

Get details and tables here. More information on housing statistics is also available at housingeconomics.com.

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