Homebuilder confidence inched up in September after falling to its lowest reading in 13 months in August, though optimism was capped by hiring difficulties and building material supply chain issues, according to the NAHB/Wells Fargo Housing Market Index (HMI).
Sentiment among single-family homebuilders edged up by one point to a reading of 76 in September, according to the HMI measure. In April 2020, builder sentiment plunged to 30 in April 2020, when pandemic lockdowns sent the economy into a tailspin. It then surged to a record high in November of that year on the back of the economic rebound, before seeing a gradual decline.
“Builder sentiment has been gradually cooling since the HMI hit an all-time high reading of 90 last November,” NAHB Chairman Chuck Fowke said in a statement. “The September data show stability as some building material cost challenges ease, particularly for softwood lumber. However, delivery times remain extended and the chronic construction labor shortage is expected to persist as the overall labor market recovers.”
Lumber is down more than 60 percent from its May peak but overall aggregate residential construction material costs increased 13 percent on an annual basis in the first eight months of this year, according to the NAHB. When combined with the recent surge in home price growth, builders see housing affordability as an issue in the months ahead.
“The single-family building market has moved off the unsustainably hot pace of construction of last fall and has reached a still hot but more stable level of activity,” Robert Dietz, the NAHB’s chief economist, said in a statement.
“While building material challenges persist, the rate of cost growth has eased for some products, but the job openings rate in construction is trending higher,” Dietz added.
Job openings in the United States surged to a record high of more than 10 million on the last day of July, while hiring lagged that figure by more than 4 million, painting a picture of an economic recovery held back by businesses struggling to fill vacant positions.
Construction hiring in July edged up to 384,000 from 371,000 in June, according to the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS), released Sept. 8. The report also showed that total the number of job vacancies jumped by 749,000 to 10.9 million on the last day of July, with 321,000 openings in construction.
Mortgage rates remain at historic lows, buoying homebuyer interest.
“Homeowners can capitalize on this prolonged period of ultra-low mortgage rates by refinancing and generating meaningful monthly savings to absorb the rising household costs seen in other areas,” Bankrate chief financial analyst Greg McBride told The Epoch Times in an emailed statement.
Households have been hit hard by inflationary pressures in recent months, with inflation running well above the Federal Reserve’s target of around 2 percent.
Reuters contributed to this report.