Builder Confidence Increased in July 2020

News about low inventory and historic low mortgage rates has been garnering a lot of attention in the housing market. While real estate agents have been noticing a recovery in the market for the past couple of months, the latest NAHB/Wells Fargo Housing Market Index (HMI) is also showing an increase in builder confidence. 

 

July 2020 Builder Confidence

 

In July, builder confidence in the market for new single-family homes jumped to 72 points, up from 58 points in June. This is a significant increase from April, when builder confidence plummeted to a low of 30 points, the lowest level since 2012.

 

The HMI is a monthly survey that has been conducted for 30 years. It gathers information about builder perceptions and buyer traffic for single-family homes. Anything above 50 points indicates a positive outlook for the market, and below 50 indicates a negative outlook. 

 

The Appeal of New Construction

 

Buyers are actively searching for homes. With low inventory and the desire for a floorplan to meet needs created by the pandemic (like home offices and outdoor living spaces), builders are seeing more interest from prospective buyers. 

 

“Builders are seeing strong traffic and lots of interest in new construction as existing home inventory remains lean,” said NAHB Chairman Chuck Fowke.  “Moreover, builders in the Northeast and the Midwest are benefiting from demand that was sidelined during lockdowns in the spring. Low interest rates are also fueling demand, and we expect housing to lead an overall economic recovery.”

 

Low mortgage rates aren’t just for existing homes, they extend to new construction. If you are a prospective buyer who isn’t haven’t luck with current inventory, consider building new or looking at new developments.

Builder Confidence Reaches 20-year High

If you are in the market to buy or sell a home, you may have heard that at the end of 2019, the national inventory declined by 9.5%, according to realtor.com

What does this mean? With fewer homes on the market, and buyers actively searching for their next house, experts predict inventory will remain low into 2020. 

It also means that builder confidence levels are breaking records.

National Association of Home Builders/Wells Fargo Housing Market Index

Every month for the past 30 years, the National Association of Home Builders (NAHB) conducts a Housing Market Index survey. This survey gauges builder perceptions of current single-family homes sales and sales expectations for the next six months.

The last two monthly surveys – December 2019 and January 2020 – have the highest confidence levels for builders since 1999. The confidence level reached 76 points in December and decreased by just one point in January. To compare, builder confidence in January 2019 was 58 points. 

What does this mean?

With low inventory levels, low mortgage rates, and a strong labor market, builders are going into 2020 with high levels of optimism. 

NAHB Chairman Greg Ugalde said,

“Low interest rates and a healthy labor market combined with a need for additional inventory is setting the stage for further home building gains in 2020.”

Builders are prepared to tackle the problem of low housing inventory, particularly for single-family homes and starter homes. Buyers who are frustrated with a lack of housing options can work with builders or search for new development projects in the area. 

Are you considering building in 2020? Contact us today!

 

 

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