Monday, 16 of July of 2018

Economics. Explained.  

Homebuilder Confidence

June 18, 2018

Homebuilder confidence declined 2 points in June after having risen a similar amount in May.  The December level of 74 was the highest for this series since July 1999 — over 18 years ago — and current confidence levels remains just a few points below the lofty December level.

NAHB Chairman Randy Noel, a homebuilder from LaPlace, Louisiana, said ,“Builders are optimistic about housing market conditions as consumer demand continues to grow.  However, builders are increasingly concerned that tariffs placed on Canadian lumber and other imported products are hurting housing affordability. Record-high lumber prices have added nearly $9,000 to the price of a new single-family home since January 2017.”

NAHB Chief Economist Robert Dietz added “Improved economic growth, continued job creation and solid housing demand should spur additional single-family construction in the months ahead.  However, builders do need access to lumber and other construction materials at reasonable costs in order to provide homes at competitive price points, particularly for the entry-level market where inventory is most needed.”

Traffic through the model homes fell 1 point in June to 50.  The December level of  58 was by far the highest level thus far in the business cycle.  Traffic volume remains high and an index level of 50 indicates that the number of people going through model homes was the same in June as in May.

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 1.3 million pace.  They should continue to climb gradually in the months ahead and reach 1.4 million by the end of 2018.

Stephen Slifer

NumberNomics

Charleston, SC


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