US Builders Are The Most Confident They've Been About New Single-Family Homes In 11 Months

The National Association of Home Builders released a June report Monday indicating a sign of gradual optimism on the homebuilding front.

The report highlighted a surge in demand, a lack of existing inventory and improved supply chain efficiency that helped boost builder confidence to its highest level in 11 months.

As per the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), builder confidence in the market for newly built single-family homes rose five points to 55, surpassing all estimates in a Bloomberg survey of economists.

Regionally, the three-month moving averages for regional HMI scores for the South grew three points higher to 55, the Northeast advanced two points to 47, the West gained five points to 46 and the Midwest rose four points to 43.

Builder confidence has increased for six consecutive months, with sentiment levels surpassing the midpoint of 50 first time since July 2022.  

As per the June HMI survey, 25% of builders slashed home prices to boost sales in June (7% average price cut), with shares declining to 27% in May and 30% in April from a peak of 36% in November 2022.

The survey revealed that 56% of builders offered incentives to buyers in June vs. 54% in May and 62% in December 2022.

“A bottom is forming for single-family home building as builder sentiment continues to gradually rise from the beginning of the year. This month marks the first time in a year that both the current and future sales components of the HMI have exceeded 60, as some buyers adjust to a new normal in terms of interest rates. The Federal Reserve nearing the end of its tightening cycle is also good news for future market conditions in terms of mortgage rates and the cost of financing for builder and developer loans.” said NAHB Chief Economist Robert Dietz.

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