Will the Recent Surge in Builder Confidence Affect Your Bottom Line?
The National Association of Home Builders / Wells Fargo Housing Market Index, otherwise known as the HMI, released new figures last week with some details that may surprise you: Builder confidence is up significantly, as it applies to new, single-family homes. How much? Six points to 65, which is up from 59 in August. This is the highest mark we’ve seen in over a year.
Why are builders more confident in new builds?
We’ve also seen household incomes on the rise in many markets, which is why buyers are getting more serious. Serious buyers = serious profits for buildings, so it’s really no surprise at all that they’re feeling more confident about the housing industry in general. The single-family home market is expected to continue to make gradual gains through not just the end of this year but through 2017 as well.
There are of course other reasons that their confidence is up. Job creation is great, but low interest rates have been a big factor too. It’s one of the reasons buyers are demanding new homes, and in many areas the existing inventory of both new and existing homes is tight.
What the drawbacks for builders?
It’s easy to see why this would be a great bit of information but there are also some issues. The main drawback we’re hearing many builders are having is that they have supply-side constraints like a shortage of qualified laborers and a shortage of space to build new homes. It’s also true that some developers simply aren’t up to taking on more work.
At ECL Software, we always want to remind you that our Just Do It Once software can actually significantly improve workflow, which can cut down on the time you’re spending getting projects going and help you get to the point where projects are underway and complete. As you see more and more confidence you’re also likely to be in a position of managing more construction loans. Don’t worry, we can help with that too! Contact us today at 800-625-5972 for more information.
How exactly are these new stats compiled?
NAHB has been conducting a monthly survey for more than 30 years, and the resulting NAHB/HMI gauges who builders feel about the expected sales of single-family homes today and six months out. Their options are: Good, fair, or poor. The survey also asks the respondents to rate traffic of potential buyers. Their choices are: High to very high, average, or low to very low. Scores are then calculated based on all the answers, and adjusted for the season. Any number that’s higher than 50 means that more builders see the conditions as good rather than poor.
There’s a lot to be excited about right now, and ECL Software is here to be a partner through the process. Contact us today to find out more about how we can streamline your processes.
Recent Comments