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ArlingtonReal EstateBuilder confidence solid despite lumber, legislative concerns

Builder confidence solid despite lumber, legislative concerns

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Strong buyer demand helped offset supply-chain challenges, a surge in lumber prices and the threat of increased regulation, as builder confidence in the market for newly built single-family homes inched up slightly in February to 84 on a 0-to-100 scale.

Figures, taken from a survey of builders across the nation, are reported monthly through the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).

The survey gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.”

The HMI index gauging current sales conditions held steady at 90, while the component measuring sales expectations in the next six months fell three points to 80. The gauge charting traffic of prospective buyers rose four points to 72.

The market has a lot of factors to unpack in evaluating current and future conditions, NAHB officials said:

• “Lumber prices have been steadily rising this year and hit a record high in mid-February, adding thousands of dollars to the cost of a new home and causing some builders to abruptly halt projects at a time when inventories are already at all-time lows,” said NAHB chairman Chuck Fowke, a custom-homebuilder from Tampa. “Builders [also] remain very focused on regulatory and other policy issues that could price out households seeking new homes in a tight market this year.”

• “Demand conditions remain solid due to demographics, low mortgage rates and the suburban shift to lower-cost markets, but we expect to see some cooling in growth rates for residential construction in 2021 due to cost factors, supply-chain issues and regulatory risks,” said NAHB chief economist Robert Dietz. “Some builders are at capacity and may not be able to expand production due to these headwinds.”

Looking at the three-month moving averages for regional HMI scores, the Northeast rose two points to 78, the Midwest fell one point to 81, the South dropped two points to 84 and the West posted a two-point loss to 93.

HMI tables can be found at www.nahb.org/hmi

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