Builder Confidence Hits All-Time High, Lumber Risks Remain
Builder confidence in the market for newly built single-family homes increased five points to hit an all-time high of 83 in September, according to the latest NAHB/Wells Fargo Housing Market Index. The previous highest reading of 78 in the 35-year history of the series was set last month and also matched in December 1998.
"Historic traffic numbers have builders seeing positive market conditions, but many in the industry are worried about rising costs and delays for building materials, especially lumber," says NAHB Chairman Chuck Fowke. "More domestic lumber production or tariff relief is needed to avoid a slowdown in the market in the coming months."
"Lumber prices are now up more than 170 percent since mid-April, adding more than $16,000 to the price of a typical new single-family home," says Robert Dietz, NAHB chief economist. "That said, the suburban shift for home building is keeping builders busy, supported on the demand side by low interest rates. In another sign of this growing trend, builders in other parts of the country have reported receiving calls from customers in high-density markets asking about relocating."
All the HMI indices posted their highest readings ever in September. The HMI index gauging current sales conditions rose four points, the component measuring sales expectations in the next six months increased six points and the measure charting traffic of prospective buyers posted a nine-point gain.