Builder Sentiment Highest Since 2005

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Sales are picking up pace, but lack of lots and labor is a cause for concern

July 16, 2015

More serious buyers are visiting models and discussing prices and features, say builders in the NAHB/Wells Fargo Housing Market Index, which reached 60 in July.

A reading as high as 60 has not been seen since late 2005. Additionally, two of the three components of the index also rose to the highest levels in 10 years – the index for expected sales rose two points from June’s 69 to 71, and the index of current sales rose one point from the June level to 66.

However, there is still concern among builders about access to lots and labor. “Ready-to-build lot supply continues to be the biggest concern among builders as the cheaper lot supply left from the bust is about exhausted,” the NAHB reports. “The pipeline of new developments was interrupted by very limited access to capital from regional and community banks and competition for the available lots has intensified.”

The NAHB’s survey in May 2015 found that 62 percent of builders scored lot supply as “low or very low,” an increase from 59 percent in May 2014.

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