Builder confidence in the market for newly built single-family homes increased five points to 90 in November, shattering the previous all-time high of 85 recorded in October, according to the latest NAHB/Wells Fargo Housing Market Index. Builder confidence levels have hit successive all-time highs over the past three months.
"Historically low mortgage rates, favorable demographics and an ongoing suburban shift for home buyer preferences have spurred demand and increased new home sales by nearly 17 percent in 2020 on a year-to-date basis," says Chuck Fowke, NAHB chairman. "Though builders continue to sign sales contracts at a solid pace, lot and material availability is holding back some building activity. Looking ahead to next year, regulatory policy risk will be a key concern given these supply-side constraints."
"Another record high for the HMI reflects that housing is a bright spot for the economy," says Robert Dietz, NAHB chief economist. "However, affordability remains an ongoing concern, as construction costs continue to rise and interest rates are expected to move higher as more positive news emerges on the coronavirus vaccine front. In the short run, the shift of housing demand to lower density markets such as suburbs and exurbs with ongoing low resale inventory levels is supporting demand for home building."
Of note, 69 percent of the responses for this survey were received before the election for president was called by the media on Nov. 7. The election results, and their future impacts on housing market conditions, will be more fully reflected in December's HMI report.
All the HMI indices posted their highest readings ever in November. The HMI index gauging current sales conditions rose six points, the component measuring sales expectations in the next six months increased one point and the measure charting traffic of prospective buyers rose three points.
