Construction workers frame a new home in the Sunfield neighborhood of Buda, Texas, on Wednesday, Nov. 10, 2021.
Homebuilders are feeling more confident in the housing market even in the slower season.
The National Association of Home Builders/Wells Fargo Housing Market Index shows builder sentiment in the single-family housing market. February is the highest level of the year and the fourth consecutive increase. Positive sentiment is defined as anything over 50.
Despite concerns over inflation, supply-chain disruptions and an ongoing labor shortage, the increase comes despite it. According to the producer price index, prices for wallboard, steel, aluminum and plastic construction products rose sharply in November.
Chuck Fowke, Chairman of the NAHB, said that finding workers, predicting pricing and dealing with material delays are challenges.
Builders are benefiting from the low supply of existing homes for sale. The build-for-rent sector continues to gain steam, and they are seeing high demand from investors. During the third quarter of 2021, the number of single-family built-for-rent construction starts reached its highest quarterly volume on record.
There are hurdles ahead of them, especially given how high prices have been recently. The cost of a new home in the US increased in October. Mortgage rates are expected to rise as the Federal Reserve eases its support for mortgage-backed bonds.
Robert Dietz, chief economist for the NAHB, said that while single-family starts are expected to end the year 24% higher than the pre-covid level, we expect higher interest rates in 2022, will put a damper on housing affordability.
Current sales conditions rose one point to 90, and buyer traffic rose one point to 70, of the three components of the HMI. The sales expectations for the next six months were unchanged for the third month in a row.
The Northeast rose 4 points to 74, the Midwest increased 2 points to 74, and the South and West each gained 3 points to 87.
