Home Building Market Rebounds Slightly
Read for the latest in the home construction market
Despite being buffeted by strong currents from different directions in May, home builder confidence rebounded to “neutral”, despite facing a 30-year fixed rate mortgage interest rate that has doubled from the end of 2020.
The new home market was boosted by a lack of existing homes on the market. Homeowners were holding tightly to their existing homes based on previous low-interest-rate mortgages on homes that they bought or refinanced in the last few years. So home builders have responded with new construction — somewhat smaller on average to restrain the mortgage needed for purchase.
With a long-term housing shortage in the U.S., the number of new housing permits issued has flattened after dropping last year as mortgage interest rates soared last year.
In the meantime, multi-family construction which had remained strong last year has flattened in 2023, but at a reasonably high level historically.
Homebuilder confidence is measured by the National Association of Homebuilders/Wells Fargo Housing Market Index which rebounded to a neutral score of 50 in May (on a scale of 0 to 100) after dipping as low as 31 last December.
The housing market is a key driver of demand for forest products.