Homebuilder confidence surges past expectations, as buyer demand remains high

While new construction is still underway, Carpenters are busy building townhomes. Building material supply in Tampa is in high demand, which was May 5, 2021.
Octavio Jones | Reuters

Homebuilders in the United States aren’t being dissuaded by higher prices or long wait times. With the demand for single-family houses still strong, the confidence of homebuilders in this market grew more than anticipated in November to its highest point since May. 

The National Association of Home Builders/Wells Fargo Housing Market Index, (HMI) saw confidence rise 3 points to 83. Positive is anything above 50. Analysts expected it to stay at 80. In November 2020, sentiment was at 90.

Chuck Fowke from Tampa, Florida, chairman of NAHB, stated that the solid home-building market continued in November despite ongoing supply side challenges. Single-family home construction continues to be boosted by strong consumer demand and a lack of resale inventory.

Current sales conditions rose to 89, which is the highest of all three index components. Also, buyer traffic rose 3 points to reach 68. At 84, sales projections for the following six months remained unchanged. 

While there are many buyers, the majority of components needed to build a house are scarce. Some builders have taken advantage of this situation, including the largest in the country. DR HortonTo slow down sales to ensure they deliver on-time.

Donald Horton, the chairman of the company, stated that the company has continued to restrict home sales by selling houses later in construction cycles in order to match our production levels and ensure homebuyers have certainty about closing dates. 

Builders are still facing supply disruptions, a huge labor shortage and can’t locate enough land to build.  

Robert Dietz of NAHB, Chief Economist for Construction said that the availability of lots is low and that there are more than 330,000 jobs in construction. He called upon policymakers to address these issues.

The sentiment indexes in the Midwest and South increased 4 points on a 3-month average HMI score. They rose to 72 and 85, respectively, according to a regional moving average. The West saw a one-point increase to 84 while the Northeast experienced a two-point decline to 70.

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