A subdivision of a house has been built on January 31, 2023 in San Marcos, Calif. Construction workers work on a house.
Mike Blake | reuters
mortgage rates are high and shakyHomes are still expensive, and inflation is not under control, but even so, the nation’s homebuilders are starting to feel better about their business.
A monthly gauge of builder confidence in the market for newly constructed single-family homes rose in March, although analysts had expected a decline. The National Association of Home Builders/Wells Fargo Housing Market Index rose two points to 44. Anything above 50 is considered positive.
This is the third consecutive monthly increase in builder sentiment. The index stood at 79 last March, when mortgage rates were much lower.
“Even as builders continue to deal with persistently high construction costs and material supply chain constraints, they continue to report strong pent-up demand as buyers await a fall in interest rates and new domestic markets due to a paucity of existing are turning more in. stores,” NAHB said president Alicia Huey, a custom homebuilder from Birmingham, Alabama, in a release. “But given the recent volatility concerns in the banking system and volatility in interest rates, builders are highly uncertain about the near and medium term outlook.”
Of the three components of the index, current sales positions rose two points to 49, and buyer traffic rose three points to 31. However, sales expectations fell one point to 47 in the next six months.
NAHB chief economist Robert Dietz said, “While financial system stress has recently lowered long-term interest rates, which will help housing demand in the coming weeks, housing inventory for potential homebuyers has increased.” Cost and availability remain a significant barrier.” release.
The country’s second largest home builder, lenar, reported on Tuesday its quarterly earnings beat analysts’ expectations. “Homebuyers are increasingly considering the possibility that today’s interest rate environment could be the new normal,” Stuart Miller, president of Lennar, said in the release. Accordingly, the housing market continues to change as increasing household and family formation replaces old Demand continues to drive against a lack of supply.”
And the supply side could also be another victim of banking stress. Dietz said 40% of builders in a March sentiment survey currently characterize lot availability as “poor.”
“Fed tightening, along with the follow-on effect of pressure on regional banks, will further hinder acquisition, development and construction (AD&C) loans for builders across the country. When AD&C loan conditions are tight, A lot of inventory gets compressed. And that adds an additional barrier to housing affordability,” Dietz said.
Regionally, builder sentiment in the Northeast rose five points to 42, at its three-month moving average. In the Midwest, it rose one point to 34. In the South it rose five points to 45, and in the West it rose four points. more than 34 points.