Saturday, 21 of October of 2017

Economics. Explained.  

Homebuilder Confidence

October 17, 2017

Homebuilder confidence rose 4 points in October to 68 after having declined 3 points in September.  Confidence is bouncing around from month to month at a very high level.    The moderate drop in September appears to reflect builder concerns following Hurricane Harvey and the 4-point jump in October the first step in the recovery process.

NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas said, ““This month’s report shows that home builders are rebounding from the initial shock of the hurricanes.  However, builders need to be mindful of long-term repercussions from the storms, such as intensified material price increases and labor shortages.”

NAHB Chief Economist Robert Dietz said “It is encouraging to see builder confidence return to the high 60’s levels we saw in the spring and summer.  With a tight inventory of existing homes and promising growth in household formation, we can expect the new home market continue to strengthen at a modest rate in the months ahead.”

Traffic through the model homes rose 1 point in October to 48 after having declined by 1 point in August.  The March reading of 53 was 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 1.2 million pace.  They should continue to climb gradually in the months ahead and reach 1.35 million by the end of 2018.

Stephen Slifer


Charleston, SC

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