March 15, 2017
Homebuilder confidence surged upwards by 6.0 points in March to 71 which is a 12-year high level. Clearly, builders believe that housing market will perform well in 2017.
Robert Dietz, Chief Economist for the home builders association said, “While builders are clearly confident, we expect some moderation in the index moving forward. Builders continue to face a number of challenges, including rising material prices, higher mortgage rates, and shortages of lots and labor.”
Traffic through the model homes jumped 8 points in March to 54, once again the highest reading thus far in the business cycle.
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 2017.