Despite growing affordability challenges stemming from rising material prices and shortages, builder sentiment in the market for newly built single-family homes moved upward in October, according to the monthly National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).
The index rose four points higher to stand at 80 on a 0-to-100 scale, owing largely to stronger consumer demand.
Those who looked at the data contained in the survey said the message it sent was somewhat mixed.
“Although demand and home sales remain strong, builders continue to grapple with ongoing supply-chain disruptions and labor shortages that are delaying completion times and putting upward pressure on building material and home prices,” said NAHB chairman Chuck Fowke, a custom builder from Tampa.
“Builders are getting increasingly concerned about affordability hurdles ahead for most buyers,” said NAHB chief economist Robert Dietz. “Building-material price increases and bottlenecks persist, and interest rates are expected to rise in coming months.”
Derived from a monthly survey that NAHB has been conducting for 35 years, the HMI 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.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
All three major HMI indices posted gains in October. The index gauging current sales conditions rose five points to 87; the component measuring sales expectations in the next six months posted a three-point gain to 84; and the gauge charting traffic of prospective buyers moved four points higher to 65.
Looking at the three-month moving averages for regional HMI scores, the Midwest rose one point to 69, the Northeast held steady at 72, and the South and West each remained unchanged at 80 and 83, respectively.
HMI tables can be found at nahb.org/hmi.