A contractor works in the basement of a house under construction in the Toll Brothers Regency community in Palisades in Charlotte, North Carolina.
Luke Sharrett | Bloomberg | Getty Images
Buyers ‘demand for newly built homes continues to grow, and this keeps builders’ confidence high, even with rising construction material prices.
Builder sentiment increased by one point to 84 in February, according to the latest housing market index from the National Association of Builders / Wells Fargo (HMI) released on Wednesday. Anything over 50 is considered a positive feeling. The index stood at 74 in February 2020.
“Wood prices are steadily rising this year and reached a record high 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 stocks are already at a premium. low levels, “said NAHB President Chuck Fowke, a custom home builder from Tampa, Florida. “Construction companies remain very focused on regulatory and other political issues that could hurt families looking for new homes in a tight market this year.”
Although home prices are a concern in both the new and existing domestic markets, there appears to be little drop in buyer demand. Of the three components of the index, current sales conditions remained stable at 90, and potential buyer traffic increased four points to 72. Sales expectations in the next six months, however, fell three points to 80.
“Demand conditions remain solid due to demographics, low mortgage rates and suburban move to lower cost markets, but we expect to see some cooling in growth rates for residential construction in 2021 due to cost factors, supply chain problems and regulatory risks, “said NAHB Chief Economist Robert Dietz. “Some builders are at the limit of capacity and may not be able to expand production due to these headwinds.”
Regionally, in a three-month moving average, the builder’s sentiment in the Northeast rose two points, to 78, and dropped one point, to 81 in the Midwest. In the South, it dropped two points to 84 and in the West it dropped two points to 93.