Thanks to this year’s record low mortgage rates, the Millennial generation fully maturing into homebuying age, and people reassessing what they need and want from their house amid the ongoing pandemic, homebuilders have literally never felt better about the housing business than they do right now.
A new report from the National Association of Home Builders shows that builder confidence, a measure of how homebuilders feel about the market, hit an all-time high in November.
In fact, it’s actually the third straight month that builder confidence has hit an all-time high. Builder confidence first broke its all-time record in September, broke that record in October, and broke it again in November.
According to the NAHB report, builder confidence in the market for newly-built single-family homes rose by five points to 90 in November, up from October’s all-time high of 85.
The NAHB has been publishing the builder confidence report for 35 years, meaning this month’s figures are the highest in the 35-year history of the survey. The survey asks homebuilders to provide their view on current single-family home sales and sales expectations over the next six months. The survey also asks builders about traffic from prospective buyers.
According to the NAHB, all three pieces of the survey each hit record highs in November.
“Historically low mortgage rates, favorable demographics and an ongoing suburban shift for home buyer preferences have spurred demand and increased new home sales by nearly 17% in 2020 on a year-to-date basis,” NAHB Chairman Chuck Fowke said.
“Though builders continue to sign sales contracts at a solid pace, lot and material availability is holding back some building activity,” Fowke added. “Looking ahead to next year, regulatory policy risk will be a key concern given these supply-side constraints.”
According to NAHB Chief Economist Robert Dietz, housing affordability is an “ongoing concern,” with home prices and construction costs continuing to rise. In the short-term, Dietz said that buyers’ desire for more space in and around their home will continue to boost homebuilders’ business.
“The shift of housing demand to lower density markets such as suburbs and exurbs with ongoing low resale inventory levels is supporting demand for home building,” Dietz said.