Builder Confidence Low, Material and Home Prices High
Provided by Robert Warther, Warther Private Wealth
The housing market has been in a crazy state for over a year now, but signs of problems have been around for a while now.
Two weeks ago, the National Association of Home Builders and Wells Fargo released the results of their latest Housing Market Index survey. This is a survey that asks builders to rate market conditions for new single-family homes in the present time and the next 6 months, as well as traffic of prospective buyers to new homes.
In the release on Wednesday, it was announced that builder sentiment for newly built homes is down 5 points from the month before. This is the lowest buyer traffic has been since July of 2020, as prospective buyers are experiencing some shock from high housing prices. NAHB chief economist Robert Dietz stated that although interest in home buying remains solid, higher costs and a lack of materials have led to lower levels of home building and new home sales. Despite these challenges however, he feels that in the coming months, the supply chain issues should ease.
The survey asks builders to rate current and future home sale expectations as “good”, “fair” or “poor”. It also asks builders to rate the level of traffic of prospective buyers as “high to very high”, “average” or “low”. The seasonally adjusted index is then calculated using the scores from each component, where any number over 50 indicates that more builders believe conditions are good rather than bad.
The HMI index that gauge’s current sales declined by 5 points in August, coming to rest at 81, while the component to measure traffic of prospective buyers also declined by 5 points, coming to rest at 60. The component used to gauge upcoming sales expectations held steady at 81 points.
The NAHB also calculates regional HMI scores, on a rolling 3-month basis for the Northeast, Midwest, South and West of the United States. All four of the regions posted at least a one-point drop decline in the HMI, with the Midwest and West dropping 2 points and the South dropping 3 points.
More information on the HMI index and housing statistics can be found at nahb.org/hmi
Robert Warther may be reached (239) 276-7939, or bob@wartherprivatewealth.com.
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