Monday, 24 of September of 2018

Economics. Explained.  

Homebuilder Confidence

September 18, 2018

Homebuilder confidence was unchanged in September at 67 after having fallen fell 1 point in August.  The December level of 74 was the highest for this series since July 1999 — over 18 years ago — and current confidence levels are somewhat below the lofty December level.

NAHB Chief Economist Robert Dietz said  “Despite rising affordability concerns, builders continue to report firm demand for housing, especially as millennials and other newcomers enter the market. The recent decline in lumber prices from record-high levels earlier this summer is also welcome relief, although builders still need to manage construction costs to keep homes competitively priced. Wages and subcontractor payments continue to rise as the labor market for residential construction sector remains tight.”

Traffic through the model homes was unchanged in September was unchanged at 49 after having fallen fell 3 points in August.  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 49 indicates that the number of people going through model homes was slightly lower in September than in August.

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 1.30 million by the end of 2018 and 1.35 million by the end of next year.

Stephen Slifer

NumberNomics

Charleston, SC


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