Builder Confidence Continues to GrowBy RISMedia Staff
Builder confidence grew again in July due to a continued demand for new homes; however, high mortgage rates are causing concern, according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This is the seventh straight month of increases and marks the highest level since June 2022.
“The lack of resale inventory means prospective homebuyers who have not been priced out of the market continue to seek out new construction in greater numbers,” said NAHB Chairman Alicia Huey in a statement. “At the same time, builders are troubled over rising mortgage rates approaching 7% and continue to grapple with supply-side challenges, including ongoing scarcity of electrical transformer equipment and growing concerns about lot availability.” The HMI grew one point in July to 56 (any number over 50 indicates that more builders view conditions as good than poor), and all three major HMI indices posted gains as well. The data:
Given that shelter inflation accounts for roughly 40% of the Consumer Price Index, Dietz added that the best way to ease this source of inflationary pressure is to build additional for-rent and for-sale housing. “There’s been some commentary linking gains for housing construction with increased concerns for additional inflation, but this has the economics backwards,” he said. “More housing supply is good news for future shelter inflation readings in the market. Furthermore, higher interest rates increase the cost of financing for building homes and developing lots.” In a similar vein, RISMedia’s Broker Confidence Index (BCI) also grew, jumping to 6.7 in June after dipping to 6.3 in May. RISMedia Senior Editor Jesse Williams, author of the BCI, attributes this rise to industry optimism in the summer selling season and future outlook, but also attributes the flip flopping readings to a constantly shifting economy. For the full report, including data tables, click here. |
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