Builder confidence in the market for newly constructed homes rose another point in July according to the National Association of Home Builders (NAHB). The NAHB/Wells Fargo Housing Market Index (HMI) hit 56 in its seventh straight month of improvement. This is a 25-point gain since its December 2022 low and its highest level since June of last year. NAHB Chief Economist Robert Dietz said the low inventory of pre-owned homes is shoring up demand for new homes and is pushing builder confidence up, “even as the industry continues to grapple with rising mortgage rates, elevated construction costs and limited lot availability.” “The lack of resale inventory means prospective home buyers who have not been priced out of the market continue to seek out new construction in greater numbers. At the same time, builders are troubled over rising mortgage rates approaching 7 percent and continue to grapple with supply-side challenges, including ongoing scarcity of electrical transformer equipment and growing concerns about lot availability.” Dietz continued, “Although builders continue to remain cautiously optimistic about market conditions, the quarter-point rise in mortgage rates over the past month is a stark reminder of the stop and start process the market will experience as the Federal Reserve nears the end of the ongoing tightening cycle. “Given that shelter inflation accounts for roughly 40 percent of the Consumer Price Index, the best way to ease this largest source of inflationary pressure is to build additional for-rent and for-sale housing. There has been some commentary linking gains for housing construction with increased concerns for additional inflation, but this has the economics backwards. 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.
Related Articles
Housing affordability remains historically low: NAHB
February 9, 2024
Mariel Alumit
Housing Wire
Comments Off on Housing affordability remains historically low: NAHB
Mortgages rates reached their highest level since 2000, construction costs rose and building regulations remained burdensome, leaving U.S. housing affordability near a 10-year low point at the end of last year, according to the […]
NAHB: Dept. of Energy is Making it Harder to Create Affordable Housing
November 9, 2023
Mariel Alumit
Weely Real Estate News
Comments Off on NAHB: Dept. of Energy is Making it Harder to Create Affordable Housing
The National Association of Home Builders (NAHB) has called out the U.S. Department of Energy (DOE) for creating regulations that have negatively impacted efforts to address the production of affordable housing. In testimony delivered today […]
Homebuilders Tell Congress ESG Policies Harm Affordable Housing Production in the U.S.
July 17, 2023
Mark Paul Cervantes
Economy, Top News, U.S. Housing Market
Comments Off on Homebuilders Tell Congress ESG Policies Harm Affordable Housing Production in the U.S.
This past week the National Association of Home Builders (NAHB) told Congress that burdensome government regulations and mandates which support environmental, social and governance (ESG) policies impede the housing industry’s ability to increase the production […]