Homebuilder Sentiment Running High Despite Production Bottlenecks



Homebuilder sentiment remains “close to record highs given exceptionally low inventory,” the Bank of America reports.

The National Association of Home Builders housing index, a measure of homebuilder sentiment, peaked at a record high of 90 in November, though it currently sits a few points lower at 83.

This finding comes in the midst of significant cost pressures on builders, with a rise in lumber and related products’ prices having added “over $34-K to the price of a new home over the past year.” These cost increases are beginning to hold back the production of new homes, the report found.

Ultimately, the report finds more significant risks in the future of existing home sales. “Looking ahead, we suspect the risks are for existing home sales to head lower due to the combination of declining affordability and tight inventories,” the report says. “Meanwhile, new home sales may grind higher as these supply challenges funnel demand towards new construction

Existing home sales have declined this year, while demand continues to be high. “Mortgage purchase applications and existing home sales have been declining this year and we expect further slippage,” the report noted. “In contrast, we see upside for new home sales and housing starts but with speed bumps due to high costs.”

Have a healthy day, Keep the Faith!