Homebuilder Confidence on the Rise

Live Real Estate News


According to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), builder confidence in the market for newly-built single-family homes rose an impressive seven points to 37.

Experts explain that this stabilization and present positive sentiment among builders could most likely be attributed to the fact that home construction was considered essential,which allowed workers in the residential construction industry to continue working and earning, even amid the worst of the recent lockdown crisis. 

Yet another factor contributing to the optimism is the fact that builders appear to be showing great adaptability in their approach to the new business environment via utilizing innovative methods to not just weather the change but to thrive in the new normal. 

A sampling of some of these methods includes the incorporation of things like more social media, adopting virtual tours, and sealing deals with online closings. Also interesting to note is that jurisdictions are likewise jumping on board to weather the storm by adapting via the adoption of third-party and virtual inspection mandates.

Regarding the demand in the market, low-interest rates are responsible for helping to maintain its level. Furthermore, now that many regions are beginning to open up and relax the stay-at-home mandates, allowing previously furloughed employees to get back to work, this demand is only expected to further increase. Added to these optimistic factors for the forward motion of the market is the fact that mortgage application data has shown a consistent rise throughout the month, pointing to signs that more buyers are getting active and beginning to be on the lookout for their next home.

The NAHB recently reported that the overall costs for residential construction materials fell more than ever recorded in April. Prices paid for industry fell 4.1%. 

This significant decline in residential construction prices for goods contributes to the year-to-date decline, which now stands at -5.4%. Up until now, the lowest recorded year-to-date decline was seen in 2009, which was -1.3%—a marked contrast to today’s much lower showing. 


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