Household confidence improves despite record high timber prices

Buyer demand for newly built homes continues to increase, and this keeps building confidence high, even though the prices of building materials are rising.

According to the latest National Association of Home Builders / Wells Fargo Housing Market Index (HMI) released on Wednesday, builder sentiment rose one point to 84 in February. Anything above 50 is considered a positive sentiment. The index stood at 74 in February 2020.

“The price of timber has risen steadily this year, reaching a record high in mid-February, adding thousands of dollars to the cost of a new home, causing some builders to abruptly stop projects at a time when stocks are falling. was already low, “said NAHB Chairman Chuck Fowke, a homebuilder from Tampa, Florida. “Builders remain very focused on regulatory and other policy issues that could price households who want to look for homes in a tight market this year.”

Although house prices are of concern in the new as well as the existing housing market, it seems that the demand from the buyers is very little. Of the index’s three components, current sales conditions remained stable at 90, and the traffic of prospective buyers rose by four points to 72. However, sales expectations in the next six months dropped by three points to 80.

“Demand conditions remain solid due to demographics, low mortgage rates and the suburban shift to lower-cost markets, but we expect growth rates for residential construction to decline slightly in 2021 due to cost factors, supply chain issues and risks of the regulations, “he said. NAHB chief economist Robert Dietz. “Some builders are on their ability and may not be able to expand production due to this headwind.”

Regionally, on a three-month moving average, builder sentiment rose two points to 78 in the Northeast and one point to 81 in the Midwest. In the South it dropped two points to 84 and in the West two points to 93.