Rising demand for new homes has driven a builder confidence index to its highest level since 2005 when the housing market was booming.
However, the housing market today is being constrained by a limited supply of newly built homes and tight mortgage credit. Yet buyers are very motivated to complete a sale, according to the chairman of the National Association of Home Builders.
“Builders are seeing more motivated buyers walk through their doors than they have in quite some time,” said NAHB chairman Rick Judson, a builder from Charlotte, N.C.
“What’s more, firming home prices and thinning inventories of homes for sale are contributing to an increased sense of urgency among those who are in the market,” Judson said.
This sense of urgency and strong demand, which gives builders the ability to raise prices, pushed the NAHB/Wells Fargo Housing Market Index up three two notches from July to 59 in August. (Any reading over 50 indicates more builders view conditions as good than poor.)
Back in April at the start of the
“Builder confidence continues to strengthen along with rising demand for a limited supply of new and existing homes in most local markets,” noted NAHB chief economist David Crowe.
“However, this positive momentum is being slowed by the ongoing headwinds of tight credit and low supplies of finished lots and labor.”
