Optimism Rising

There are many factors that contribute to the housing inventory shortage—Baby Boomers being hesitant to sell their houses, rising prices of building materials, and a sheer lack of available homes in hot markets. And still, despite recent talks about lack of skilled labor in the work force, builder sentiment is still high, according to a recent report by the National Association of Home Builders.

August marks the first in eight months that sentiment is rising for potential construction, marking a rise of four points from 64 to 68 this month.

“Our members are encouraged by rising demand in the new-home market,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas. “This is due to ongoing job and economic growth, attractive mortgage rates, and growing consumer confidence.”

“The fact that builder confidence has returned to the healthy levels we saw this spring is consistent with our forecast for a gradual strengthening in the housing market,” said NAHB Chief Economist Robert Dietz. “GDP growth improved in the second quarter, which helped sustain housing demand. However, builders continue to face supply-side challenges, such as lot and labor shortages and rising building material costs.”

The NAHB home builder index gauges sentiment on three levels: “good,” “fair,” and “poor,” with a foresight of 6 months.

Most of those surveyed had faith in sales condition, which rose four points from 70 to 74, while expectations for the coming six months rose from 73 to 78 points. Buyer traffic was virtually unmoved, rising from 48 to 49.

Broken down regionally on a three-month moving average, the Northeastern region was the only region that showed any sort of movement, if that, which rose from 47 to 48. The Midwest, West, and South region we unchanged, staying at 66, 75, and 67 respectively.