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Builder Confidence Edges Up as Strong Demand Offsets Supply Challenges

Strong buyer demand pushed builder confidence up in April even as builders continued to grapple with rising lumber prices and supply chain issues and consumers faced higher home prices due to a lack inventory. The latest National Association of Home Builders/Wells Fargo Housing Market Index shows that builder confidence in the market for newly built single-family homes rose one point in April. 

"Despite strong buyer traffic, builders continue to face challenges to add much needed housing supply to the market," says Chuck Fowke, NAHB chairman. "The supply chain for residential construction is tight, particularly regarding the cost and availability of lumber, appliances and other building materials. Though builders are seeking to keep home prices affordable in a market in need of more inventory, policymakers must find ways to increase the supply of building materials as the economy runs hot in 2021."

"While mortgage interest rates have trended higher since February and home prices continue to outstrip inflation, housing demand appears to be unwavering for now as buyer traffic reached its highest level since November," says Robert Dietz, NAHB chief economist. "NAHB's forecast is for ongoing growth in single-family construction in 2021, albeit at a lower growth rate than realized in 2020." 

The HMI index gauging current sales conditions increased one point and the gauge charting traffic of prospective buyers posted a three-point gain. The component measuring sales expectations in the next six months fell two points.