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Home Building Market Rebounds Slightly
Read for the latest in the home construction market
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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.