Agents already facing tight supplies in many markets, which have been stretched even further by hurricanes and wildfires, received some good news when homebuilder confidence reached a 6-month high this month.
According to a CNBC report, the monthly sentiment index from the National Association of Home Builders rose 4 points to 68, the highest level since May. A reading above 50 is considered positive sentiment. NAHB Chairman Granger MacDonald, a homebuilder and developer from Kerrville, Texas, said storms that battered the U.S. have had an impact, but that appears to be settling down.
“This month’s report shows that homebuilders are rebounding from the initial shock of the hurricanes. However, builders need to be mindful of long-term repercussions from the storms, such as intensified material price increases and labor shortages.”
Labor shortages across the country have been cited by homebuilders as the greatest hurdle to productivity. Just one week after Hurricane Harvey left portions of Houston inundated with water, many contractors had a waiting list of more than a year for repairs. Homes destroyed by the storm created an even longer list.
NAHB Chief Economist Robert Dietz said builders are also seeing more demand stemming from the very short supply of existing homes for sale. Of the Home Builders index’s three components, current sales conditions rose five points to 75. Sales expectations over the next six months also rose five points to 78.
“It is encouraging to see builder confidence return to the high 60s levels we saw in the spring and summer. With a tight inventory of existing homes and promising growth in household formation, we can expect the new home market continue to strengthen at a modest rate in the months ahead.”
On a regional basis over a three-month running average, homebuilder sentiment in the South rose two points to 68 and in the Northeast rose one point to 50. Sentiment in the West and Midwest remained unchanged, at 77 and 63.