Home Builder Confidence Hits New High, But Worries About Affordability Persist

Confidence among home builders hit a new high for the year this month, up five points to 59 on the much-monitored index from the National Association of Home Builders and Wells Fargo released today. This is the highest reading since September 2014.
Readings above 50 indicate more builders view market conditions as favorable than poor. The index has not been that high since June 2014. But average rates for 30-year mortgages last week surpassed 4 percent for the first time since November 2014. And the Federal Reserve is likely to begin raising benchmark, short-term rates later this year.

High rates, combined with home prices still rising in many areas with tight supplies of existing homes, is putting pressure on home-buying affordability, keeping many potential consumers out of the market.
But demand for new homes seems to be on the rise, builders say.
“Builders are reporting more serious and committed buyers at their job sites and this is reflected in recent government data showing that new-home sales and single-family construction are gaining momentum,” said NAHB Chairman Tom Woods, a home builder from Blue Springs, Mo.
However, NAHB Chief Economist David Crowe cautions that at the “builders remain sensitive to consumers’ ability to buy a new home.”
Nonetheless, the NAHB/Wells Fargo index components that measures current and future sales expectations are at their highest levels since the last quarter of 2005, indicating a growing optimism, Crowe added.
Looking at the three-month moving averages for regional scores, the South and Northeast each rose three points to 60 and 44, respectively. The West posted a two-point gain to 57 while the Midwest dropped by one point to 54.

Leave a Reply

Your email address will not be published. Required fields are marked *