Homebuilding Surging As Builders Remain Confident

Construction on new homes has gotten off to a strong start in 2018. Throughout January, the numbers show that both permit requests and actual housing starts are both up, about 7.4% over last year at the same time. It seems highly likely this trend will continue since builders are feeling very confident about market conditions for at least the next six months.

Builders report seeing high demand still, great buyer traffic, and of course the strong price gains are helping to drive construction as well. The result of all this? Turns out builder confidence about the next six months to come is the highest since the beginning of the recession.

The measures for builder confidence come from a national survey conducted monthly by the National Association of Home Builders (NAHB). The survey asks builders for their perceptions of current market conditions for newly constructed homes, and their expectations for the next six months, ranking each as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate an index number that represents overall confidence for comparison. Put simply, any number over 50 shows that more builders view conditions as good than bad, and right now builders’ confidence in the future stands at 80!

It’s great to hear that builder confidence is so high, not only because it’s another sign of the past recession fading further in our collective rearview mirror, but because it means they will continue to ramp up construction on new inventory. With prices climbing as they are and more demand than inventory, we’ll need to stay in a cycle of increased building for a while to give new buyers some help with the availability of affordable homes!

We don’t expect demand for housing to slow down any time soon, especially if job creation remains strong. But it’s expected to grow at a gradual and steady pace, which is good for the market. Have you toured any new model homes lately? Maybe it’s a good time to check them out while rates are still low and before prices climb any higher. Let us know if you have questions about new home construction or any other recent Real Estate news, and contact us any time, when you’re ready to get your next move started!