According to a recent article by CNBC, the confidence of homebuilders in the U.S. has risen after a recent slump due to rising material costs.
March saw a cyclical high in confidence, but that dropped as the costs of materials rose. In particular, the cost of lumber spiked after Trump imposed a tariff on Canadian lumber.
Recently, however, builders are looking more to the economy and less to policy to gauge their feelings on the building market. A rising demand from buyers has lead to an equal uptick in builder confidence, particularly as these buyers seem willing to pay premium for new construction.
ABC reports that the declining number of resale homes available has likely pushed buyers to choose new construction over a home that was previously occupied. So far, sales are up 10.9% this year and builders seem to expect this number to remain strong.
Per Robert Dietz, the NAHB‘s chief economist, “”The fact that builder confidence has returned to the healthy levels we saw this spring is consistent with our forecast for a gradual strengthening in the housing market.”
So far in 2017, single family homes are 8.6% higher than at this point last year. As the job market and economy grow, more consumers enter the market, and development of single family rises, we should see a matching increase in builder confidence.
As for multi-family units, the NAHB reports that production in that sector peaked in 2015 but has remained steady thus far. Demand is remaining solid for these units which in turn keeps the market strong, but without the more drastic increases seen in the single family sector.