U.S. homebuilders are feeling more confident about the economy and their trade, based on the latest Housing Market Index released by the National Association of Home Builders (NAHB) and Wells Fargo.
Overall, homebuilder confidence rose to 66 points in August, a 1-point increase from July. This figure marks a slight dip from the August 2018 level of 67 points. Anything above 50 is considered positive, CNBC reports.
CNBC states this rise in homebuilder confidence is in part due to falling mortgage rates. However, homebuilders are not constructing enough new homes to meet current demand, according to the report.
“Even as builders report a firm demand for single-family homes, they continue to struggle with rising construction costs stemming from excessive regulations, a chronic shortage of workers and a lack of buildable lots,” says NAHB Chairman Greg Ugalde, a homebuilder from Torrington, Connecticut.
Even as mortgage rates fall, international trade tensions are raising prices on building materials.
“While 30-year mortgage rates have dropped from 4.1% to 3.6% during the past four months, we have not seen an equivalent higher pace of building activity because the rate declines occurred due to economic uncertainty stemming largely from growing trade concerns,” says NAHB’s chief economist, Robert Dietz. “Although affordability headwinds remain a challenge, demand is good and growing at lower price points and for smaller homes.”
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