Homebuilders are bullish on the single-family home, with one industry benchmark rising to its highest reading since the dot-com boom.
The signs are that “housing continues to lead the economy forward,” the National Association of Home Builders (NAHB) said in a press release on Monday (Aug. 17).
“The demand for new single-family homes continues to be strong, as low interest rates and a focus on the importance of housing has stoked buyer traffic to all-time highs,” said the association’s chairman, Chuck Fowke.
The latest NAHB/Wells Fargo Housing Market Index, the product of a monthly NAHB survey, showed that builder confidence in newly-built, single-family homes increased six points to 78 in August. That matches the Index's highest reading in its 35-year history, which was set in December of 1998. Whenever the Index registers anything over 50, it is considered a positive sign.
At this point in time, builders may have too much of a good thing, as lumber prices keep going up. “The V-shaped recovery for housing has produced a staggering increase for lumber prices, which have more than doubled since mid-April,” added Fowke. “Such cost increases could dampen momentum in the housing market this fall, despite historically low interest rates.”
Still, there’s lots of good news pertaining to the building of single-family homes.
“Housing has clearly been a bright spot during the pandemic, and the sharp rebound in builder confidence over the summer has led NAHB to upgrade its forecast for single-family starts, which are now projected to show only a slight decline for 2020,” said the home builder group’s Chief Economist Robert Dietz. “Single-family construction is benefitting from low interest rates and a noticeable suburban shift in housing demand to suburbs, exurbs and rural markets as renters and buyers seek out more affordable, lower-density markets.”
For some consumers, questions of health are driving their decisions.
“The thing that I think has been probably most interesting is this need for wellness,” said Sheryl Palmer, CEO of home builder Taylor Morrison. In a televised interview, she added: “I think we will continue to see … strong demand for new homes – for fresh, healthy living.”
Homebuilding in the U.S. began to recover from COVID-19 shutdowns in May.