07-16-20 | Association News

New Data Shows Housing Market Improvements

HMI Jumps to 72 in July

NAHB chairman, Chuck Fowke believes that momentum in the housing market could play a major role in creating economic recovery.

The housing market makes positive progress as a poll by NAHB reveals that builder confidence has increased significantly. The NAHB/Wells Fargo Housing Market Index (HMI). This index takes data from a monthly survey NAHB administers in which they ask their members to rate market conditions and their effect on new home sales. This information is collected and then analyzed to determine the value of the index. In January, the value stood at 74, but as the pandemic started to affect the country, that number dropped to 30 in April. With the new information available, the index rose to 72, which is comparable to the levels before COVID.

NAHB chairman, Chuck Fowke, weighed in on the data, "Builders are seeing strong traffic and lots of interest in new construction as existing home inventory remains lean. Low interest rates are also fueling demand, and we expect housing to lead an overall economic recovery."

There is a strong sense of optimism around the housing market, which has steadily gained momentum over the past month or so. However, there are still hurdles that need to be overcome to have a wide-scale economic recovery.

NAHB chief economist Robert Dietz discussed this idea in saying, "While the housing market is clearly rebounding, challenges exist. Lumber prices are at a two-year high, and builders are reporting rising costs for other building materials while lot and skilled labor availability issues persist."

While certain concerns may be limiting the positive growth, Dietz did go on to express optimism as well, "Nonetheless, the important story of the changing geography of housing demand is benefiting new construction. New home demand is improving in lower density markets, including small metro areas, rural markets, and large metro exurbs, as people seek out larger homes and anticipate more flexibility for telework in the years ahead. Flight to the suburbs is real."

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