NAHB: Builder Confidence Holds Steady in September

by Peter Thomas Ricci

The NAHB’s Housing Market Index was unswayed by market forces in September, though some trends have analysts wondering aloud.


The Housing Market Index from the National Association of Home Builders (NAHB), the definitive reading on builder confidence in the U.S. housing market, was unchanged from August to September, leading some to question where homebuilding is heading in the coming months.

Derived from a monthly survey the NAHB has been conducting for 25 years, the Housing Market Index measures builder confidence via a number of factors, and in September, the index held steady at 58; any index reading above 50 indicates that more builders see conditions as good than bad.

Housing Market Index – Impacted by High Mortgage Rates?

That 58 reading, though, comes after four straight months of solid improvement for the Housing Market Index, and some industry figures are wondering what it signifies for homebuilding.

Rick Judson, the NAHB’s chairman, said higher mortgage rates have produced some hesitancy in consumers.

“While builder confidence is holding at the highest level in nearly eight years, many are reporting some hesitancy on the part of buyers due to the sharp increase in interest rates,” Judson said. “Homebuyers are adjusting to the fact that, while mortgage rates are still quite favorable on a historic basis, the record lows are probably a thing of the past.”

Specific readings in the Housing Market Index included:

  • The component gauging current sales conditions was unchanged at 62.
  • However, the component measuring sales expectations for the next six months slid three points to 65.
  • The component for traffic of prospective buyers, though, did increase one point to 47.
  • Regionally, the Midwest once again came out on top, rising four points to 64, while the Northeast rose two points to 41, the South rose two points to 56 and the West rose four points to 61.

David Crowe, the NAHB’s chief economist, said September’s Housing Market Index amounted to a “wait and see” approach from consumers on a number of homebuilding tenets.

“Following a solid run up in builder confidence over the past year, we are seeing a pause in the momentum as consumers wait to see where interest rates settle and as the headwinds of tight credit, shrinking supplies of lots for development and increasing labor costs continue,” Crowe said.

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