by Calculated Risk on 2/17/2021 10:04:00 AM

The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 84, up from 83 in January. Any number above 50 indicates that more builders view sales conditions as good than poor.

From the NAHB: Builder Confidence: High Demand Offsets Higher Costs – For Now

Strong buyer demand helped offset supply chain challenges and a surge in lumber prices as builder confidence in the market for newly built single-family homes inched up one point to 84 in February, according to the latest NAHB/Wells Fargo Housing Market Index (HMI).

Lumber prices have been steadily rising this year and hit a record high in mid-February, adding thousands of dollars to the cost of a new home and causing some builders to abruptly halt projects at a time when inventories are already at all-time lows.

However, demand conditions remain solid due to demographics, low mortgage rates and the suburban shift to lower cost markets, but we expect to see some cooling in growth rates for residential construction in 2021 due to cost factors, supply chain issues and regulatory risks.
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The HMI index gauging current sales conditions held steady at 90, while the component measuring sales expectations in the next six months fell three points to 80. The gauge charting traffic of prospective buyers rose four points to 72.

Looking at the three-month moving averages for regional HMI scores, the Northeast rose two points to 78, the Midwest fell one point to 81, the South dropped two points to 84 and the West posted a two-point loss to 93.

Click on graph for larger image.

This graph show the NAHB index since Jan 1985.

This was slightly above the consensus forecast, and a very strong reading.

Housing and homebuilding have been one of the best performing sectors during the pandemic.