The nation’s homebuilders continue to have a positive outlook on their market, but no more positive than last month.
Homebuilder sentiment held steady in November at 63 on the National Association of Home Builders/Wells Fargo Housing Market Index. Anything above 50 is considered “positive.” That confidence, however, may change in the next report.
“With most of our members responding before the November elections, confidence levels remained unchanged as they awaited the results,” said NAHB Chairman Ed Brady, a homebuilder and developer from Bloomington, Illinois. “Still, builder sentiment has held well above 60 for the past three months, indicating that the single-family housing sector continues to show slow, gradual growth.”
The big question mark for builders right now is labor, or lack of it. Across the nation, the shortage of skilled labor has builders paying more out of pocket and delivering homes far more slowly than potential buyers might like. Construction workers, many of them immigrants, left the business during the housing crash and never returned. If the Trump administration takes a hard line on immigration, as promised, the labor crunch could worsen.
Of the index’s three components, buyer traffic rose 1 point to 47. Current sales conditions were unchanged at 69 and sales expectations over the next six months fell 2 points to 69.
Another wrench for the builders — rising mortgage rates. Mortgage applications to purchase a new home jumped 8 percent in October from October 2015, according to the Mortgage Bankers Association, but that was before rates rose a half a percentage point post-election. Newly built homes come at a price premium, and although the lack of existing homes for sale has benefited the builders, buyers are now looking at higher monthly payments just due to interest rates.
Looking at the three-month moving averages for regional Housing Market Index scores, the Northeast, Midwest and West each posted respective 2-point gains to 45, 58 and 77. The South remained unchanged at 66.