Business & Investment

Builder confidence dropped to 83 in January

Along Calculated risk above 1/28/2022 10:05:00 AM

The National Association of Home Builders (NAHB) reported that the Housing Market Index (HMI) fell from 84 to 83 in December. A number above 50 indicates that more builders consider the sales situation to be better than bad.

From NAHB: Decreased builder confidence in inflation concerns

Builder sentiment rose for four months, despite rising consumer demand and continued strong supply chain disruptions due to rising inflation concerns and continued supply chain disruptions.Builders’ confidence in the market for newly built single-family homes has been transferred 1 point down to 83 in January, According to the National Association of Home Builders (NAHB) / Wells Fargo Housing Market Index (HMI). HMI has been hovering at levels 83 or 84, the same rate as in the spring of 2021, for the past three months.

Higher material costs and lack of availability add weeks to the construction time of a typical single-family home. According to NAHB’s analysis, the total cost of housing construction materials has increased by almost 19% since December 2021. Policy makers need to take steps to modify their supply chains. Obtaining a new coniferous timber agreement with Canada and reducing tariffs is a great place to start.

The most pressing issue for the housing sector remains out of stock. Buildings have increased, but the industry is facing constraints. That is, material, workforce, and lot cost / availability. Also, the start of a single-family home in 2021 is expected to be at the end of the year, about 25% higher than the Covid level before 2019, but high interest rates in 2022 are expected to weaken the affordability of homes.

It is worth noting that HMI’s responses to the January survey were collected from January 3rd to January 13th, and many responses were collected before interest rates soared last week. The impact of these high rates will be fully reflected by the February HMI.
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The HMI index, which measures current sales, is stable at 90, the gauge that measures sales forecasts for the next 6 months is down 2 points to 83, and the component chart traffic for prospective buyers is also down 2 points. It became 69.

Looking at the three-month moving average of the regional HMI scores, the northeast fell 1 point to 73, the Midwest rose 1 point to 75, and the south and west each rose 1 point to 88. became.

Click on the graph to see a larger image.

This graph shows the NAHB index since January 1985.

This was close to the consensus prediction and was a strong reading.

Builder confidence dropped to 83 in January Builder confidence dropped to 83 in January

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