In April, home builder sentiment plummeted to a mere 30 points. Only three months later, sentiment levels are exactly where they were before the pandemic. For the month of July alone, sentiment rose 14 points up to 72, according to CNBC. The NAHB/Wells Fargo Housing Market Index, which tracks builder sentiment, considers anything over 50 to be positive. Record-low mortgage rates are giving more potential buyers the ability to stretch their dollar and, in turn, making home builders very happy. The index tracks current sales conditions, sales expectations, and buyer traffic as well. All indexes experienced growth, surpassing the 50 point mark.
“Builders are seeing strong traffic and lots of interest in new construction as existing home inventory remains lean,” said NAHB Chairman Chuck Fowke, a builder from Tampa, Florida. “Moreover, builders in the Northeast and the Midwest are benefiting from demand that was sidelined during lockdowns in the spring. Low interest rates are also fueling demand, and we expect housing to lead an overall economic recovery.”
Mortgage rates have been setting record lows almost weekly, and it is unlikely they will turn higher any time soon. That has given buyers more purchasing power, especially for newly built homes, which come at a price premium. Mortgage applications to purchase a new home were up over 50% in June annually.