Builder confidence inched up in September on lower lumber prices and strong housing demand, even as the housing sector continues to grapple with building material supply chain issues and labor challenges. Ending a three-month decline, builder sentiment in the market for newly built single-family homes edged up one point to 76 in September, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
"Builder sentiment has been gradually cooling since the HMI hit an all-time high reading of 90 last November," says Chuck Fowke, NAHB chairman. "The September data show stability as some building material cost challenges ease, particularly for softwood lumber. However, delivery times remain extended and the chronic construction labor shortage is expected to persist as the overall labor market recovers."
"The single-family building market has moved off the unsustainably hot pace of construction of last fall and has reached a still hot but more stable level of activity, as reflected in the September HMI," says Robert Dietz, NAHB chief economist. "While building material challenges persist, the rate of cost growth has eased for some products, but the job openings rate in construction is trending higher."
NAHB expects housing affordability will be a key demand-side challenge in the coming quarters, given the rapid rate of growth for home prices and construction costs over the last year.
"Regionally, we continue to see growth in the South and the West, particularly the Mountain West," says Dietz. "Exurban markets have expanded the most over the last year, although inner suburbs are now experiencing an acceleration, with townhouse construction having had the best quarter in 14 years this spring."
The HMI index gauging current sales conditions rose one point, the component measuring traffic of prospective buyers posted a two-point gain and the gauge charting sales expectations in the next six months held steady.
