Builder Sentiment Ends Year on a High Note

On Wednesday (12-15-21), The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) reported that builder sentiment in the market for newly built single-family homes edged 1-point higher in December to a reading of 84. This marks the fourth consecutive upward movement in the HMI and ties year’s highest reading (February).

Builder confidence topped at a level of 90 in November 2020. Any reading above 50 indicates that more builders view conditions as good rather than poor and that demand remains strong.

Looking at the three-month moving averages for regional HMI scores, the Northeast rose four points to a reading of 74, the South and West each posted a three-point gain to 87. The Midwest posted a two-point gain to 74.

In a statement prepared for the release of this month’s HMI report, NAHB’s Chief Economist Robert Dietz said, “The most pressing issue for the housing sector remains lack of inventory.”

“Building has increased but the industry faces constraints, namely cost/availability of materials, labor and lots,” Dietz added. “And while 2021 single-family starts are expected to end the year 24% higher than the pre-Covid 2019 level, we expect higher interest rates in 2022 will put a damper on housing affordability.”