U.S. builder confidence unexpectedly improves in September

The National Association of Homebuilders (NAHB) announced on Wednesday its housing market index (HMI) climbed 5 points to 83 in September from an unrevised August reading of 78. This was the highest reading in the 35-year history of the series.

Economists had forecast the HMI to remain at 78.

A reading over 50 indicates more builders view conditions as good than poor.

All three HMI components recorded gains this month, hitting their highest levels ever. The indicator gauging current sales conditions jumped 4 points to 88 in September, while the component measuring traffic of prospective buyers surged 9 points to record 73 and the measure charting sales expectations jumped 6 points to 84.

NAHB Chairman Chuck Fowke noted: “Historic traffic numbers have builders seeing positive market conditions, but many in the industry are worried about rising costs and delays for building materials, especially lumber. More domestic lumber production or tariff relief is needed to avoid a slowdown in the market in the coming months.”

Meanwhile, NAHB Chief Economist Robert Dietz said: “Lumber prices are now up more than 170% since mid-April, adding more than $16,000 to the price of a typical new single-family home. That said, the suburban shift for home building is keeping builders busy, supported on the demand side by low interest rates. In another sign of this growing trend, builders in other parts of the country have reported receiving calls from customers in high-density markets asking about relocating.”