Builder Confidence Has Been Declining
since January
H
omebuilder confidence in the market has been declining since January, driven by the high costs of building materials and low supply. In August, the builder’s confidence level fell to an all-time low in thirteen months, dropping by five points to 75. Experts had expected the reading to remain the same, but in August, it showed that the builder’s confidence had worsened. The United States NAHB, a body in charge of the marketing index, revealed that the 75 reading recorded in August was the lowest since July the year prior when it read 80. According to NAHB, a reading above 50 signifies that homebuilders see the market as favorable instead of poor. However, the five points decline only means that more builders have a different view of the current market conditions.
were dashed when the prices of construction materials became expensive. In November, builder confidence hit a record high of 90. However, two months later, it had fallen to 83 from 86 in December. That has been the range until 75 in August. NAHB Chairman said that while the low mortgage rates and demographics are enticing, higher building materials and supply costs have resulted in an unsurprisingly low level of home construction and even homebuying. However, NAHB’s survey for single-family homes for the next six months predicts that the market index will hold steady at 81, higher than the current 75, and could be the highest over a year. Meanwhile, the prospective buyer’s index has fallen to 60. In January, the sales conditions dropped to 90 from 92. In addition, NAHB predicted sales activities could drop to 83 within the next six months, while the buyer index would fall
Spike In Building Materials Prices Responsible for the Surging Home Prices The surging home prices across California and other states in the U.S. result from the high cost of lumber and other building materials. Consequently, this led to a low housing supply. Due to the high construction costs and limited supply, only a few prospective buyers believe this is the perfect time to acquire a home.
16 l
123rf.com
Two months before January 2021, builders were optimistic that buyer demand would skyrocket, driven by the desire to get larger homes in the suburbs due to Covid-19. However, their hopes THE POWER IS NOW MAGAZINE | OCTOBER 2021
