Home builder sentiment reached new heights in November, the National Association of Home Builders (NAHB) reported.
Builder confidence in the market for newly-built single-family homes increased five points to 90 in November, blowing well past the previous all-time high of 85 recorded in October, according to the latest NAHB/Wells Fargo Housing Market Index (HMI) released today.
This marks three consecutive months of builder confidence levels hitting all-time highs.
Historically low mortgage rates, favorable demographics, and an ongoing suburban shift for home buyer preferences have spurred demand and increased new home sales by nearly 17% in 2020 on a year-to-date basis.
But sales could be even better and are being held back by market constraints.
“Though builders continue to sign sales contracts at a solid pace, lot and material availability are holding back some building activity,” said NAHB Chairman Chuck Fowke. “Looking ahead to next year, regulatory policy risk will be a key concern given these supply-side constraints.”
Housing affordability is another ongoing concern, as construction costs continue to rise and interest rates are expected to move higher as more positive news emerges on the coronavirus vaccine front, the NAHB said.
“Another record high for the HMI reflects that housing is a bright spot for the economy,” said NAHB Chief Economist Robert Dietz. “In the short run, the shift of housing demand to lower density markets such as suburbs and exurbs with ongoing low resale inventory levels is supporting demand for home building.”