Although homebuilders still fear increasing material costs, homebuilder confidence remained unchanged at 67 in September, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
“Despite rising affordability concerns, builders continue to report firm demand for housing, especially as Millennials and other newcomers enter the market,” NAHB Chairman Randy Noel said. “The recent decline in lumber prices from record-high levels earlier this summer is also welcome relief, although builders still need to manage construction costs to keep homes competitively priced.”
NAHB Chief Economist Robert Dietz said a growing economy and rising incomes combined with increasing household formations should boost demand for new single-family homes moving forward.
In August, the unemployment rate remained at 3.9%, according to the latest Employment Situation Summary report from the U.S. Bureau of Labor Statistics.
“However, housing affordability is becoming a challenge, as builders face overly burdensome regulations and rising material costs exacerbated by an escalating trade skirmish. Interest rates are also forecasted to keep rising,” Dietz stated.
The U.S. Census Bureau announced that construction spending during July 2018 was estimated at a seasonally adjusted annual rate of $1.32 billion, 0.1% above the revised June estimate of $1.31 billion.
In September, current sales conditions inched forward one point from 73 to 74 points, while buyer traffic remained at 49 points. Lastly, expectations over the next six months rose two points from 72 to 74 points.
The three-month moving averages for regional HMI scores show the Northeast increased one point from 53 to 54 points, the South held steady and the West fell a single point from 74 to 73. The Midwest also declined three points, falling from 62 to 59.