Builder confidence in the market for newly built single-family homes increased six points to 78 in August, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index. The HMI now stands at its highest reading in the 35-year history of the series, matching the record that was set in December 1998.
"The demand for new single-family homes continues to be strong, as low interest rates and a focus on the importance of housing has stoked buyer traffic to all-time highs as measured on the HMI," says Chuck Fowke, NAHB chairman. "However, the V-shaped recovery for housing has produced a staggering increase for lumber prices, which have more than doubled since mid-April. Such cost increases could dampen momentum in the housing market this fall, despite historically low interest rates."
"Housing has clearly been a bright spot during the pandemic and the sharp rebound in builder confidence over the summer has led NAHB to upgrade its forecast for single-family starts, which are now projected to show only a slight decline for 2020," says Robert Dietz, NAHB chief economist. "Single-family construction is benefiting from low interest rates and a noticeable suburban shift in housing demand to suburbs, exurbs and rural markets as renters and buyers seek out more affordable, lower density markets."
All the HMI indices posted gains in August. The HMI index gauging current sales conditions rose six points, the component measuring sales expectations in the next six months increased three points and the measure charting traffic of prospective buyers posted an eight-point gain to reach its highest level.
