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Strong Buyer Demand Offsets Persistent Material Challenges

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Market Data + Trends

Strong Buyer Demand Offsets Persistent Material Challenges


July 20, 2021
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Photo: amnaj | stock.adobe.com

Building material costs continue to push construction and home costs up, but high homebuyer demand offsets many challenges builders face today. These ongoing influences have been the norm for home builders, as reflected in the National Association of Home Builders/Wells Fargo Housing Market Index for July. Builder confidence dropped 1 point down to 80 for builders in the newly built single-family home sector. NAHB says the price of OSB is now a leading concern for the industry as prices remain 500% higher than January 2020 levels. The White House held a supply chain summit on July 16 as a response to the NAHB’s requests for governmental assistance in the ongoing supply chain challenges.

Derived from a monthly survey that NAHB has been conducting for 35 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

The three major HMI indices were mixed in June. The HMI index gauging current sales conditions fell one point to 86, the component measuring traffic of prospective buyers dropped six points to 65 and the gauge charting sales expectations in the next six months posted a two-point gain to 81.

Looking at the three-month moving averages for regional HMI scores, the Northeast fell four points to 75, the Midwest moved one-point lower to 71 and the West posted a two-point decline to 87. The South held steady at 85.

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