Thursday, 19 of April of 2018

Economics. Explained.  

Homebuilder Confidence

April 16, 2018

Homebuilder confidence edged 1 point lower in April to 69 after having declined 1 point in March.  The December level of 74 was the highest for this series since July 1999 — over 18 years ago.

NAHB Chairman Randy Noel, a homebuilder from LaPlace, Louisiana, said,“Strong demand for housing is keeping builders optimistic about future market conditions.  .“However, builders are facing supply-side constraints, such as a lack of buildable lots and increasing construction material costs. Tariffs placed on Canadian lumber and other imported products are pushing up prices and hurting housing affordability.”

NAHB Chief Economist Robert Dietz added “Ongoing employment gains, rising wages and favorable demographics should spur demand for single-family homes in the months ahead.  The minor dip in builder confidence this month is likely due to winter weather effects, which may be slowing housing activity in some pockets of the country. As we head into the spring home buying season, we can expect the market to continue to make gains at a gradual pace.”

Traffic through the model homes was unchanged in April at 51 after having fallen 3 points in March.  However, the December level of  58 which was by far the highest level thus far in the business cycle.  Traffic volume remains high and is a sign that buyer demand is on the rise.

Not surprisingly there is a close correlation between builder confidence and housing starts.  Right now starts are lagging considerably because builders are having some difficulty finding financing, building materials, an adequate supply of finished lots, and skilled labor.  Starts  currently are at a 1.25 million pace.  They should continue to climb gradually in the months ahead and reach 1.35 million by the end of 2018.

Stephen Slifer

NumberNomics

Charleston, SC


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