Higher costs, longer construction times and elevated home prices have persistently frustrated buyers, renters and builders. However, recent reports saw an uptick in various housing data.
The NAHB/Wells Fargo Housing Market Index measure of single-family builder sentiment rose four points in October to a level of 80 — its highest reading since July. And new home sales rose 14% to an 800,000 annualized rate in September, although median prices are up almost 19% from a year ago. Existing home sales surged to an eight-month high, while inventory remains at a very low 2.4-month supply.
Housing starts ran counter to these upticks, with overall starts down slightly because of a 5% decline for multifamily starts of five-plus units. Single-family starts were flat at a 1.08 million annualized rate. Although demand remains strong, higher prices have cooled prospective buyers’ intent to purchase a home.
Meanwhile, higher home values have lifted home equity and household wealth, which is largely supporting the home improvement sector. Remodeler confidence is near all-time highs, as reflected in the NAHB/Royal Building Products Remodeling Market Index, which remained at a level of 87 for the third quarter.
Supply-chain issues continue to plague the economy, and NAHB is forecasting these challenges will persist through 2022. Residential construction material prices are up 11% thus far in 2021 and 14% higher than a year ago. Lumber prices — though down 62% from their peak in May — are trending upward yet again, and builders are reporting major delays and higher costs of a broad range of other building products.
Further compounding these issues, lot supplies are as tight as they have ever been, according to a recent NAHB survey that stretches back to 1997.
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*Note: All articles have been redistributed from NAHBnow.com*