Though battling building material issues, builders remain confident with builder confidence rising to 45 points for newly built single-family homes in April. This has increased due to a lack of resale inventory despite elevated interest rates. As mortgage rates decline towards below 6% for the 30-year fixed mortgage rates, will further the demand for housing, to increase builder confidence even more.
According to the National Association of Home Builders, “currently, one-third of housing inventory is new construction, compared to historical norms of a little more than 10%,” said NAHB Chief Economist Robert Dietz. “More buyers looking at new homes, along with the use of sales incentives, have supported new home sales since the start of 2023. And while AD&C loan conditions are tight, there is not significant evidence thus far that pressure on the regional bank system has made this lending environment for builders and land developers worse.”