Builder confidence rose 14 points in July to a level of 72, according to the National Association of Home Builders/Wells Fargo Housing Market Index. The level has returned to the same confidence level reported prior to the COVID-19 pandemic in March.
“Builders are seeing strong traffic and lots of interest in new construction as existing home inventory remains lean,” NAHB Chairman Chuck Fowke said in a statement.
Low interest rates are also fueling construction demand, according to NAHB.
Challenges within the home building industry remain, however. According to NAHB, lumber prices are at a two-year high and costs for other building materials are also rising. Skilled labor availability issues also persist.
“Nonetheless, the important story of the changing geography of housing demand is benefiting new construction,” NAHB Chief Economist Robert Dietz stated. “New home demand is improving in lower density markets, including small metro areas, rural markets and large metro exurbs, as people seek out larger homes and anticipate more flexibility for telework in the years ahead. Flight to the suburbs is real.”
Builder confidence plummeted in April due to the pandemic, but has been climbing steadily since.
Builder confidence levels above 50 generally indicate a positive outlook on the market, according to NAHB.
