Supply chain issues and tight underwriting standards have drained homebuilder confidence in the market, but economists are optimistic that springtime will usher in more positivity, according a monthly survey released today by the National Association of Home Builders.
National Association of Home Builders/Wells Fargo Housing Market Index (HMI) rates builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” Any number over 50 indicates that more builders view conditions as “good” than “poor.”
Builder confidence for newly built, single-family homes fell two points this month to a level of 53, the association said. Current sales conditions fell three points to 58, while buyer traffic dropped two points to 37.
In the last three months, the Northeast and South regions posted a two-point drop to 43 and 55, respectively. The West fell seven points to 61, while the Midwest actually rose two points to 56.
“The drop in builder confidence is largely attributable to supply chain issues, such as lot and labor shortages, as well as tight underwriting standards,” said NAHB Chief Economist David Crowe.
But even with the slight slip, the association expects the market to improve as we enter the spring buying season, said NAHB Chairman Tom Woods, a homebuilder from Blue Springs, Missouri.
“These obstacles notwithstanding, we are expecting solid gains in the housing market this year, buoyed by sustained job growth, low mortgage interest rates and pent-up demand,” Woods said.
Builders indicated in the survey that expectations in the next six months will hold steady at 59.
The NAHB/Wells Fargo Housing Market Index has been conducted monthly for 30 years. It is the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public. HMI tables can be found at nahb.org/hmi. More information on housing statistics is available at housingeconomics.com.