Builder confidence in the new home market
is finishing 2021 strong despite what the National Association of Home Builders
(NAHB) says are inflation concerns and ongoing production bottlenecks. The
NAHB/Wells Fargo Housing Market Index (HMI) edged higher for the fourth
consecutive month in December. Strong consumer demand and limited existing
inventory drove it to 84, 1 point higher than it was in November. This ties with
February for the highest reading of the year. NAHB economist Robert Dietz says the most pressing issue for the housing
sector remains lack of inventory. Building has increased but the industry faces
constraints, namely the cost and availability of materials, labor, and lots.
And while 2021 single-family starts are expected to end the year 24 percent higher
than the pre-Covid 2019 level, the higher interest rates expected in 2022 will
put a damper on housing affordability.