American homebuilders continue to share positive sentiments over their outlook on the market. Now, this sentiment is not necessarily any better than last month, but the consistency from month to month is still welcome.
Indeed, homebuilder sentiment held steady through November—at a rating of 63—according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market index. Generally, anything over a rating of “50” is considered to be “positive.”
Still, this confidence could quickly fade if nothing changes (or changes for the worse) by the next report.
“With most of our members responding before the November elections, confidence levels remained unchanged as they awaited the results,” explains NAHB Chairman Ed Brady. The Bloomington, Illinois homebuilder and developer goes on to say, “Still, builder sentiment has held well above 60 for the past three months, indicating that the single-family housing sector continues to show slow, gradual growth.”
Of course, the big question now is whether or not home builders are going to be able to find the labor they need to accommodate higher demand. Across the country, there is a shortage of skilled labor and that is forcing home builders to pay higher out of pocket expenses to deliver homes, even though the process is slower than they would like (and definitely slower than what home buyers would like).
Many construction workers are immigrants; and many people in this industry left during the housing crash and vowed to never come back. As such, the industry is in a downward spiral; and if the Trump administration enforces its proposals on immigration, the labor shortage could get even worse.
Rising mortgage rates is also putting pressure on home builders. Applications for mortgages jumped up 8 percent in October, year-over-year, according to the Mortgage Bankers Association. However, this registered before rates rose a half percent, following the election. And newly built homes usually come at a price premium.
“Ongoing job creation, rising incomes and attractive mortgage rates are supporting demand in the single-family housing sector,” Robert Dietz, the home builder trade group’s chief economist, said in a statement. “This will help keep housing on a steady, upward glide path in the months ahead.”