Builder confidence in the market for newly built single-family homes rose 5 points in May to 50, the fifth consecutive monthly increase, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). The May reading is also the first measurement of builder sentiment since July that wasn’t negative, which is considered any reading below 50.
Despite financial headwinds, a lack of existing homes for sale is driving up demand for new-construction projects and causing a subsequent boost in home builder sentiment, CNBC reports.
Builders are benefiting from a very lean existing home market. New listings in April were down nearly 22% year over year, according to Realtor.com. With mortgage rates now double what they were a year and a half ago, some potential sellers may be reluctant to trade to another home at a higher rate.
“In March, 33% of homes listed for sale were new homes in various stages of construction. That share from 2000-2019 was a 12.7% average. With limited available housing inventory, new construction will continue to be a significant part of prospective buyers’ search in the quarters ahead,” said Robert Dietz, NAHB’s chief economist.
Advertisement
Related Stories
Building Technology
How Are Builders Adopting AI?
Building pros weigh in on the benefits and unexpected challenges of implementing artificial intelligence in their construction operations at the 2023 National Institute of Building Sciences Building Innovation conference
Builders
Latest Home Builder Sentiment Is a Response to Rising Mortgage Rates
Builders are reacting to stubbornly high mortgage rates, which are eroding housing affordability
Builders
A Lack of Housing Inventory Spells Opportunity for Home Builders
Home builders are exceeding 2023 expectations as a growing number of buyers turn to new construction rather than competing for the meager supply of existing homes
