KB Home’s construction of a detached home has been shown to be under construction in the Valley Center, California community on June 3, 2021.
Mike Break | Reuters
Domestic homebuilders haven’t seen relief from supply chain problems that have recently delayed construction, but high buyer demand seems to make up for it.
According to the National Association of Home Builders / Wells Fargo Housing Market Index, builders’ confidence in the single-family home construction market rose 4 points to 80 in October. It is still down from 85 in October 2020 and a record high of 90 in November last year. Anything over 50 is considered positive.
“Demand and home sales remain strong, but builders continue to tackle ongoing supply chain disruptions and labor shortages,” said Chuck Fouquet, chairman of NAHB, a homebuilder in Tampa, Florida. Completion times have been delayed, putting upward pressure on building materials and home prices. ” , Now on sale.
Of the three elements of the index, current sales have risen 5 points to 87. Sales forecasts for the next six months rose 3 points to 84, and buyer traffic rose 4 points to 65.
Currently, the biggest concern for builders is affordability as they are raising prices to accommodate rising costs of land, labor and materials.
According to the US Census, the median new homes sold in August were 20% higher than in August 2020. Part of it is a combination of home sales, which is in the higher-end market, but it also reflects the increase in builders.
Some builders are actually delaying home sales due to construction hurdles, fearing that they will not be able to deliver homes at their normal pace.
Home buyers are increasingly looking to new construction as the supply of existing homes for sale remains incredibly lean and expensive.
“As the FRB begins to curtail purchases of US Treasuries and mortgage-backed securities, building material prices continue to rise and bottlenecks continue, and interest rates will rise in the coming months,” said Robert Dietz, chief economist at NAHB. It is expected. “
The mortgage banking association has just released a forecast that the average interest rate on 30-year fixed mortgages will reach 4% by the end of 2022, up from the current 3%.
Regionally, looking at the sentiment of the Midwest 3-month moving average builder, it rose 1 point to 69. In the northeast, it did not change at 72. In the south and west, it did not change at 80 and 83, respectively.
Homebuilder sentiment bounces despite ongoing supply chain problems
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