Builder Confidence Back on the Rise

May 2018

Builder confidence for the market on newly-built single-family homes rose two points to a level of 70 in May according to the National Association of Home Builders/ Wells Fargo Housing Market Index (HMI).

This is the fourth time this year that the confidence levels have reached 70 or higher on the HMI index. Builders remain confident in new single-family homes by continued growing demand due to the inventory shortage many are seeing within the housing market.

While concerns over lack of land to build on and a shortage of skilled workers, a new issue has come to play in this month’s builder’s confidence: the increase in lumber prices. The increase in lumber prices are driving up costs making it more difficult for builders to produce competitively price houses for first time home buyers.

Derived from a monthly survey, the NAHB/ Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months. Scores for each component are used to calculate a seasonally adjusted index where any number over 50 indicates that more builder view conditions as good than poor.

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