The nation's homebuilders have never been this happy.
In November, builder confidence in the construction market for single-family homes soared to its third record high in as many months.
Overall builder sentiment hit 90 on the monthly National Association of Home Builders' Wells Fargo Housing Market Index. Anything above 50 is considered positive. Last November, the index stood at 71. At the start of the coronavirus pandemic, in April, builder confidence plummeted to 30. Buyer demand has been incredibly and unexpectedly strong since then.
"Historically low mortgage rates, favorable demographics and an ongoing suburban shift for home buyer preferences have spurred demand and increased new home sales by nearly 17% in 2020 on a year-to-date basis," said NAHB Chairman Chuck Fowke, a custom homebuilder from Tampa, Florida. "Though builders continue to sign sales contracts at a solid pace, lot and material availability is holding back some building activity. Looking ahead to next year, regulatory policy risk will be a key concern given these supply-side constraints."
Of the index's three components, current sales conditions rose 6 points to 96. Sales expectations in the next six months increased 1 point to 89 and buyer traffic rose 3 points to 77.
The NAHB noted that 69% of the responses for the November survey were received before the election for president was called by the media on Nov. 7. The election results, therefore, and their impact on builder sentiment, will be reflected more fully in December's HMI report.
The nation's homebuilders have been benefiting from a very low supply of existing homes for sale, as well as a newfound consumer desire to live out in the suburbs. The stay-at-home culture of the pandemic means buyers want not just more space, but specific spaces for working, schooling and exercising at home. They also want more outdoor space. The unexpected surge in demand caught builders off guard early on, and they are now dealing with supply chain issues that are increasing costs.
"Another record high for the HMI reflects that housing is a bright spot for the economy," said the NAHB's chief economist, Robert Dietz. "However, affordability remains an ongoing concern, as construction costs continue to rise and interest rates are expected to move higher as more positive news emerges on the coronavirus vaccine front."
Regionally, on a three-month moving average, homebuilder sentiment in the Northeast increased 2 points to 83. In the Midwest it jumped 6 points to 80. In the South it rose 4 points to 86, and in the West it climbed 4 points to 94.