ConDig (16-Sept-20). US homebuilder confidence in the market for newly-built single-family homes surged to an all-time high of 83 in September, according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).
The previous highest reading of 78 in the 35-year history of the HMI was set last month and also matched in December 1998.
The jump comes as all the HMI indices posted their highest readings ever in September. The HMI index gauging current sales conditions increased four points to 88, the sales expectations in the next six months index rose six points to 84 and the measure charting traffic of prospective buyers logged a nine-point gain to 73.
“Historic traffic numbers have builders seeing positive market conditions, but many in the industry are worried about rising costs and delays for building materials, especially lumber,” said NAHB chairman Chuck Fowke.
“More domestic lumber production or tariff relief is needed to avoid a slowdown in the market in the coming months.”
Lumber prices are up more than 170% since mid-April, adding more than $16,000 to the price of a typical new single-family home, according to NAHB.
In August alone, lumber prices shot up 14.9% month on month, marking the largest four-month gain since such data was first recorded in 1949 and the second-largest gain since seasonally adjusted data became available in 1975.
Homebuilders are now looking to switch into alternative building materials like steel to help minimize the impact of lumber costs.
“The suburban shift for home building is keeping builders busy, supported on the demand side by low interest rates. In another sign of this growing trend, builders in other parts of the country have reported receiving calls from customers in high-density markets asking about relocating,” added NAHB chief economist Robert Dietz.