Industry News

Building confidence rising despite worries around affordability

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Ongoing drops in mortgage rates coupled with continued strength in the job market are boosting confidence among builders, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

Robert Dietz, PhD, chief economist at NAHB, reported builder confidence rose four points to 62 in February, which marked the second consecutive month in which all HMI indices posted gains. The other metrics track sentiment on current sales conditions, expectations for the coming six months, and buyer traffic.

In the aftermath of the fall slowdown, many builders are reporting positive expectations for the spring selling season, according to Dietz.

NAHB members say affordability remains a critical issue. “Rising costs stemming from excessive regulations, a dearth of buildable lots, a persistent labor shortage and tariffs on lumber and other key building materials continue to make it increasingly difficult to produce housing at affordable price points,” Dietz stated.

The HMI gauges builder perceptions of current single-family homes sales and sales expectations for the next six months using ratings of “good,” “fair,” or “poor.” For traffic of prospective buyers, builders rate it as “high to very high,” “average,” or “low to very low.”

Scores for each component are calculated on a seasonally adjusted index, with any number higher than 50 indicating more builders view conditions as good than poor. The most recent feedback had three components as “good” with scores of 62 and higher. The index for buyer traffic improved but was lowest, scoring a metric of 48.

NAHB has conducted its monthly Housing Market Index for 30 years.

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