According to the Housing Market Index (HMI) by the National Association of Home Builders and Wells Fargo, builder confidence rose in the month of April by one point for an overall score of 83. This rise in confidence happened despite supply challenges that home builders have been facing for the past few months.
According to an article by Robert Dietz on Eye on Housing, the HMI is “Derived from a monthly survey that NAHB has been conducting for 35 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.”
As the nation slowly reopens and the heightened times of the pandemic subside, people are seeking more living space in their residences, pushing them to explore homeowning. The potential home buyers are heating the housing market up, resulting in homes being sold quickly and at a higher price.
While the demand is a positive for the home building industry, there have been some challenges with getting the building materials necessary to build new homes. For example, lumber prices have soared over the past few months, making it difficult for builders to develop new homes for buyers. Some housing organizations have even asked the federal government to intervene on the rising costs.
Regardless, builders seem to be looking on the bright side and builder confidence is reflecting that.