The confidence of home builders is improving, despite record timber prices

Buyers’ demand for newly built homes continues to grow, which keeps builder confidence high even as building prices rise.

The builder’s sentiment rose one point to 84 in February, according to the latest indication from the National Association of Home Builders / Wells Fargo, published on Wednesday. Anything over 50 is considered a positive feeling. The index was 74 in February 2020.

“Timber prices have risen steadily this year and hit a record high in mid-February, adding thousands of dollars to the cost of a new home and causing some builders to abruptly halt projects at a time when stocks are already at a minimum.” “Builders remain very focused on regulatory issues and other policies that could cost households looking for new homes in a tight market this year,” said NAHB President Chuck Fowke, a custom home builder.

While house prices are a concern in both the new and existing internal markets, there seems to be a very small decline in buyer demand. Of the three components of the index, current selling conditions remained at 90, and potential buyers’ traffic increased by four points to 72. Sales expectations for the next six months fell by three points to 80.

“Demand conditions remain strong due to demographics, low mortgage rates and suburban shift to lower cost markets, but we expect to see a cooling of growth rates for residential construction in 2021 due to cost factors, supply chain issues and of regulatory risks, ”said NAHB Chief Economist Robert Dietz. “Some builders are at capacity and may not be able to expand production because of these headwinds.”

At the regional level, on a three-month moving average, the sentiment of builders in the Northeast increased by two points to 78 and decreased by one point to 81 in the Midwest. In the south it decreased by two points to 84 and in the west it decreased by two points to 93.