Builder Confidence Steadies as Material and Labor Challenges Persist

Economics
Published

Builder confidence inched up in September on lower lumber prices and strong housing demand, even as the housing sector continues to grapple with building material supply chain issues and labor challenges. Ending a three-month decline, builder sentiment in the market for newly built single-family homes edged up one point to 76 in September, according to the NAHB/Wells Fargo Housing Market Index (HMI) released today.

“Builder sentiment has been gradually cooling since the HMI hit an all-time high reading of 90 last November,” said NAHB Chairman Chuck Fowke. “The September data show stability as some building material cost challenges ease, particularly for softwood lumber. However, delivery times remain extended and the chronic construction labor shortage is expected to persist as the overall labor market recovers.”

“The single-family building market has moved off the unsustainably hot pace of construction of last fall and has reached a still hot but more stable level of activity, as reflected in the September HMI,” said NAHB Chief Economist Robert Dietz. “While building material challenges persist, the rate of cost growth has eased for some products, but the job openings rate in construction is trending higher.”

NAHB expects housing affordability will be a key demand-side challenge in the coming quarters, given the rapid rate of growth for home prices and construction costs over the last year.

“Regionally, we continue to see growth in the South and the West, particularly the Mountain West,” said Dietz. “Exurban markets have expanded the most over the last year, although inner suburbs are now experiencing an acceleration, with townhouse construction having had the best quarter in 14 years this spring.”

Derived from a monthly survey that NAHB has been conducting for 35 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good”, “fair” or “poor”. The survey also asks builders to rate traffic of prospective buyers as “high to very high”, “average” or “low to very low”. Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

The HMI index gauging current sales conditions rose one point to 82, the component measuring traffic of prospective buyers posted a two-point gain to 61 and the gauge charting sales expectations in the next six months held steady at 81. Looking at the three-month moving averages for regional HMI scores, the Northeast fell two points to 72, the South dropped two points to 80 and the West registered a two-point decline to 83. The Midwest remained unchanged at 68.

HMI tables can be found at nahb.org/hmi. More information on housing statistics is also available at Housing Economics PLUS (formerly housingeconomics.com).

Subscribe to NAHBNow

Log in or create account to subscribe to notifications of new posts.

Log in to subscribe

Latest from NAHBNow

Disaster Response

May 27, 2025

Home Builders Fund Helps Rebuild Homes After Natural Disasters

This year, natural disasters have once again left a trail of destruction across the country. In response, the HBIDRF has stood alongside local and state HBAs as they support their communities and members in times of crisis.

Membership | Housing Affordability

May 23, 2025

Florida Builders and Local Leaders Team Up to Create Lasting Affordable Housing

An innovative partnership between the HBA of West Florida and local lawmakers is offering a blueprint for how communities across the U.S. can create lasting, affordable housing.

View all

Latest Economic News

Economics

May 27, 2025

Building Material Price Growth Minimal in April

Prices for inputs to new residential construction—excluding capital investment, labor, and imports—fell 0.4% in April, following a (revised) increase of 0.8% in March. These figures are taken from the most recent Producer Price Index (PPI) report published by U.S. Bureau of Labor Statistics.

Economics

May 26, 2025

State-Level Employment Situation: April 2025

Nonfarm payroll employment increased in 40 states in April compared to the previous month, while it decreased in 10 states and the District of Columbia. According to the Bureau of Labor Statistics, nationwide total nonfarm payroll employment increased by 177,000 in April following a gain of 185,000 jobs in March.

Economics

May 23, 2025

Volatile Spring Selling Season Continues

The Census estimate of new home sales posted an unexpected gain in April even as builders and consumers continue to deal with economic uncertainty, elevated interest rates and rising building material costs.