Builder Sentiment Rises to Record High Despite Soaring Lumber Prices, Labor Shortages

Builders are reportedly the most chipper they’ve been in 35 years, but key issues are threatening their positive sentiment. Home builder confidence advanced by five points this month to 83, according to CNBC. Any number above 50 is considered positive. The current sentiment levels are the highest in the NAHB/Wells Fargo Housing Market Index’s 35-year history. As builder sentiment rose, as did current sales conditions, sales expectations, and traffic of prospective buyers. Housing demand is strong, making builders happy, but increasing lumber prices along with the lack of trained workers are a cause of concern.

All three of the index’s components rose to record highs. Current sales conditions rose 4 points to 88. Sales expectations in the next six months increased 6 points to 84. Traffic of prospective buyers increased 9 points to 73.

“The suburban shift for home building is keeping builders busy, supported on the demand side by low interest rates,” said NAHB Chief Economist Robert Dietz. “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.”

While housing demand is incredibly strong, builders continue to be dogged by a lack of skilled labor and finished lots. And now, there’s a new hurdle — fast-rising prices for lumber due to the Covid-19 crisis and the raging fires in the West.

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