Home builders are keeping upbeat about the new single-family housing market, with their confidence coming in at a reading of 68 in the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). Index readings of 50-plus indicate more builders identify the market as “good” than “poor.”
“Even with this month’s modest drop, builder confidence is on very firm ground, and builders are reporting strong interest among potential homebuyers,” says Granger MacDonald, chairman of the NAHB, pointing to the nominal three-point dip in the Index.
The Index measure of sales expectations is also down, three points to 75, while the measure of current sales is down three points to 74. The measure of homebuyer traffic is down one point to 52.
“The fact that the HMI measure of current sales conditions has been over 70 for five consecutive months shows that there is continued demand for new construction,” says Robert Dietz, chief economist of the NAHB. “However, builders are facing several challenges, such as hefty regulatory costs and ongoing increases in building material prices.”
Prices, in fact, climbed by double digits in March alone, according to a recent report by Associated General Contractors of America (AGC).
“Prices have jumped in recent months for…materials essential for houses, nonresidential buildings and infrastructure projects,” said Ken Simonson, chief economist for AGC, in a statement on the report. “Contractors generally cannot pass these costs along on projects that have broken ground, and the data show they have not been able to price new buildings at a level that reflects their rising materials, services and labor costs.”
The April HMI reading comes after a high March reading—the highest reading since 2005.
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