Home builders are finally optimistic about the housing market outlook after nearly a year of uncertainty. The scarcity of previously-owned homes for sale is boosting builders’ confidence. According to a recent survey by Redfin, a majority of homeowners have low mortgage rates, making it less attractive for them to sell.
Consequently, new home listings have decreased by 22 percent compared to the same period last year. However, this has resulted in improved business prospects for home builders, according to a report by MarketWatch. The National Association of Home Builders reported a 5-point increase in their monthly confidence index, reaching 55 in June. This positive sentiment marks the sixth consecutive month of improvement and the first time in 11 months that builder confidence has surpassed 50. Builders have also scaled back on sales incentives, with fewer price cuts observed. Additionally, the three key indicators of the builder-confidence index—current sales conditions, future sales, and traffic of prospective buyers—have all shown positive gains. The pandemic-induced supply shortage in the housing market has presented challenges for home buyers and industry professionals.
Nevertheless, builders have managed to benefit from this situation due to their focus on new construction.
Overall, the housing market is showing signs of stabilization, and with the Federal Reserve’s easing of monetary policies, the NAHB predicts positive market conditions in terms of mortgage rates and financing costs for builders and developers.