Although home builders continue to voice concerns about construction affordability due to high building prices, a lack of buildable lots and laborers, builder confidence ticked up slightly in March. According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), builder confidence in the market for newly constructed single-family homes increased one point to 38 in March after a revised upward adjustment in February.
“Affordability for buyers and builders remains a top concern,” said NAHB Chairman Bill Owens, a home builder and remodeler from Worthington, Ohio. “Many buyers remain on the fence waiting for lower interest rates and due to economic uncertainty. Builders are facing elevated land, labor and construction costs and nearly two-thirds continue to offer sales incentives in a bid to firm up the market.”
Additionally, according to the most recent HMI survey, some 37% of builders lowered prices in March, a little increase from 36% in February. At 6%, the average price decrease did not change. In March, 64% of sales incentives were used, a decrease of 1% from February and the 12th consecutive month that this percentage was higher than 60%. The median sales price for all existing homes last month hovered just below $400,000, marking the 32nd consecutive month of year-over-year price increases, according to the National Association of Realtors (NAR).
“While the Freddie Mac 30-year fixed rate mortgage averaged 6.05% in February, the lowest since August 2022, downpayment hurdles and uncertainty from the conflict with Iran and the price of oil will be headwinds going forward,” said Robert Dietz, Chief Economist for NAHB. “The administration’s executive orders issued last week to reduce regulatory burdens associated with home building are a positive step toward increasing attainable housing supply.”
In March, all three of the main HMI indices showed increases. From February to March, the HMI indicator monitoring current sales conditions rose one point to 42, the index measuring future sales jumped two points to 49, and the index tracking prospective buyer traffic increased three points to 25. Further, the Northeast remained stable at 44, the Midwest remained stable at 43, the South remained stable at 35, and the West dropped two points to 31 when examining the three-month moving averages for regional HMI scores.
“A lot of people have more confidence in what their house should cost, and what we’re seeing right now is that new homes are the only game in town,” said National Association of Home Builders CEO Jim Tobin.
Note: The NAHB/Wells Fargo HMI survey was completed after the start of the conflict with Iran.
U.S. Home Builder’ Blueprint to ‘s 10-Point Housing Plan
NAHB has announced a 10-point housing plan to help control shelter inflation and alleviate the housing affordability crisis by removing obstacles that prevent the construction of new homes and apartments, as the country’s shortage of about 1.5 million housing units is making it more and more difficult for American families to afford to buy or rent a home.
NAHB is presenting a plan that outlines actions that can be taken at the local, state, and federal levels to address the obstacles to expanding the country’s housing supply, as policymakers at all levels of government are searching for ways to provide more affordable homeownership and rental housing opportunities for all Americans.
NAHB 10-Point Housing Plan
- Eliminate excessive regulations
- Promote careers in the skilled trades
- Fix building material supply chains and ease costs
- Preserve energy choice for home heating and appliances
- Overturn inefficient local zoning rules
- Alleviate permitting roadblocks
- Adopt reasonable and cost-effective building codes
- Reduce local impact fees and other upfront taxes associated with housing construction
- Make it easier for developers to finance new housing
- Update employment policies to promote flexibility and opportunity
Housing inflation is still increasing more quickly than overall inflation. Rising housing expenses have been responsible for more than half of the economy’s inflation over the past year. Building more accessible, cheap housing is the only method to successfully control shelter inflation, especially in light of rising mortgage and development/construction loan interest rates.
To read the full plan, click here.
