For the first time in nearly a year, homebuilder confidence moved into positive territory on strong consumer demand, limited competition from the existing home sales market and improving supply chains.
National Home Builders AssociationThe June survey shows the sixth straight month that builder confidence has increased and it is the first time that the sentiment level has crossed the midpoint of 50 (out of 100) since July 2022. The score in June was 55, up five points from May.
“Builders are feeling cautiously optimistic about market conditions given low levels of current home inventory and ongoing gradual improvements to supply chains,” said Alicia Huey, president of NAHB, a custom home builder and developer in Birmingham, Alabama. Are.” “However, builder and developer loans have become more difficult to obtain over the past year, which will ultimately result in less supply as the industry tries to extend the cycle lows.”
federal Reserve The halting of its tightening cycle in terms of mortgage rates and the cost of funding for builder and developer loans bodes well for future market conditions.
NAHB chief economist Robert Dietz said the Fed and Washington policymakers should take note of how the housing situation is important to the inflation outlook and the future of monetary policy.
“Shelter cost growth is now the leading source of inflation, and such costs can only be contained by building more affordable, attainable housing – for sale, for rent, multi-family and single-family,” he said. Said.
Another positive sign for demand conditions for single-family homes is that the June HMI survey shows homebuilders are gradually pulling back on sales incentives.
Compared to 27% in May and 30% in April, 25% of home builders in June slashed home prices to boost sales. Furthermore, the average price reduction was 7% in June, lower than the 8% rate recorded in December 2022. in December 2022 (62%).
Existing home sales have fallen to seasonally historic lows since the COVID-19 pandemic, which has benefited homebuilders. Altos Research Data showed just 451,000 single-family homes on the market as of June 16; There were about 950,000 on the market in June 2019.
The NAHB reported that its gauge of homebuilders’ current sales conditions rose five points to 61, and they expect it to remain consistent over the next six months. The gauge measuring traffic of potential buyers rose four points to 37.
Regionally speaking, the Northeast gained two points to 47, the Midwest gained four points to 43, the South gained three points to 55 and the West gained five points to 46.
