Builder Confidence Reaches All-Time High

Home builders are confident about current single-family home sales and sales expectations for the next six months. As a house flipper this can be a positive sign for the fate of projects you’ve got in progress, and in the pipeline.

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), which measures builder confidence, reached 90 points in November (on a scale from 0 to 100), according to an article published on the NAHB website. This is the highest score ever recorded since the index was created 35 years ago, and marks only the third time it has ever surpassed 80. Over the past three months builder confidence levels have hit successive all-time highs.

Just to provide some added perspective, the April HMI was 30—the lowest since June 2012.

NAHB Chief Economist Robert Dietz saw this as good news for the economy, but expressed concern about home affordability.

“Another record high for the HMI reflects that housing is a bright spot for the economy,” he said in the article. “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.”

The shift of homebuyers from densely-populated areas to suburbs, along with low resale housing inventory and low interest rates, continue to support demand for home building.

But all is not perfect on the home front. In October the NAHB reported that the home-buying frenzy over the past several months has not only caused a scarcity of home inventory, but a shortage of lumber as well, which has caused lumber prices to rise dramatically. Because of the increased cost of lumber an average of $16,000 has been added to the price tag of a typical new single-family home, according to the Bureau of Labor Statistics.

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