A contractor works in the basement of a house under construction in the Toll Brothers Regency community in the Palisades community of Charlotte, North Carolina.
Luke Sharrett | Bloomberg | Getty Images
Demand from buyers of new housing continues to rise and this keeps builders’ confidence high, even as prices for building materials rise.
Builder sentiment rose one point to 84 in February, according to the latest housing market index (HMI) from the National Association of Home Builders / Wells Fargo. Anything over 50 is considered positive feeling. The index stood at 74 in February 2020.
“Timber prices have risen steadily this year and hit a record in mid-February, adding thousands of dollars to the cost of a new home and causing some builders to abruptly halt projects at a time when inventories are already minimal “said NAHB President Chuck Fowke, a Tampa, Florida bespoke home builder. “Builders remain heavily focused on regulatory issues and other policy issues that could cost homes looking for new homes in a tight market this year.”
While house prices are a concern in both new and existing domestic markets, there seems to be very little decline in buyer demand. Of the three components of the index, current sales conditions remained at 90 and potential buyer traffic increased four points to 72. Sales expectations for the next six months, however, fell three points to 80.
“Demand conditions remain strong due to demographics, low mortgage rates and suburban shift to low-cost markets, but we expect to see some cooling in residential construction growth rates in 2021 at due to cost factors, supply chain problems and regulatory risks, ”he said. Robert Dietz, chief economist at the NAHB. “Some builders have capacity and they may not be able to expand production due to these headwinds.”
At the regional level, with a three-month moving average, builder sentiment in the Northeast rose two points to 78 and fell one point to 81 in the Midwest. In the south it fell two points to 84 and in the west it decreased two points to 93.