HMI Skyrockets to 72

The National Association of Home Builders published their most recent home builder sentiment report, indicating that overall home builder sentiment shot up by 14 points to 72 in July.

All three components of the HMI index increased:
■ Current sales increased 16 points to 69
■ Sales expectation for the next six months rose seven points to 75
■ Buyer traffic increased 15 points to 58

The 72 reported for home builder sentiment represents the same level that it had been prior to the pandemic in March. Anything less than 50 is considered negative.

According to the chairman of the NAHB, Chuck Fowke, demand for new construction continues to remain very strong. What appears to be atypical is the demand being experienced in the Northeast, and not just the Midwest. The low interest rates are of course a big incentive but the scarcity of available homes makes this a very attractive market for homebuilding.

The low mortgage rates are clearly giving buyers more purchasing power, and fear concerning the restart of the economy is not being felt in this current economy. According to the builders, mortgage applications for new homes have skyrocketed up over 50% in June on a year-over-year basis.

Problems or the obstacles being faced by homebuilders comes in the shortage of skilled labor and the bump in lumber prices.

According to the report, lumber prices are at a two-year high, and other building materials are also rising. As new home demand improves in low-density markets, builders are seeking out availability of properties to purchase. It even seems that telework is becoming a bigger factor in terms of the kind of home that people believe that they will need to have in the post-pandemic economy.