New data from the National Association of Home Builders (NAHB) and Wells Fargo’s Housing Market Index (HMI) showed that homebuilder confidence grew in May to its second highest point since the recession.

The report, which is compiled from a monthly survey that the NAHB has conducted for 30 years, gauges homebuilder sentiment of current single-family homes sales, and expectations over the next six months.

According to HousingWire, homebuilder confidence increased by two points in May, rising to 70, up from 68 in April. In the survey, a number over 50 indicates that most homebuilders in the survey view conditions as good rather than poor.

“This report shows that builders’ optimism in the housing market is solidifying, even as they deal with higher building material costs and shortages of lots and labor,” said NAHB Chairman Granger MacDonald.

As the Daily Business News covered here, the Commerce Department reported that single-family homebuilding market rose 0.4 percent to a pace of 835,000 units in April, with single-family starts growing 19.4 percent in the Midwest and 9.1 percent in the West, while they fell 3.4 percent in the South and tumbled 29.2 percent in the Northeast.

While Granger sees optimism, economists polled by Reuters believe that homebuilders are failing to effectively take advantage of a chronic shortage of properties for sale amid complaints about expensive building materials and shortages of lots and labor.

Overall, two of the three components that make up the HMI increased in May, with the sales expectation component rising four points to 79, and the current sales component rose two points to 76. By comparison, the component that measures buyer traffic dropped to 51.

“The HMI measure of future sales conditions reached its highest level since June 2005, a sign of growing consumer confidence in the new home market,” said NAHB Chief Economist Robert Dietz.

“Especially as existing home inventory remains tight, we can expect increased demand for new construction moving forward.”

 

 

 

Increased Demand… But Can It Be Met?

Comments from Dietz expose a significant challenge for the site built housing industry, where a confluence of cost, labor, timing and demand all meet… and cannot be satisfied quickly enough.

With consumer demand for quality, affordable housing that can be delivered quickly, the manufactured housing industry sits “in the driver’s seat” when it comes to being able to fill that gap.

Even though manufactured and modular homebuilders are also susceptible to crunches at times, one of the numerous advantages of factory building is the ability to recruit and train team members who can work effectively in a production center environment. When combined with the ability to significantly cut down on production time, manufactured housing serves as the ideal solution to inventory and housing challenges.

For more on manufactured housing being the solution that’s hiding in plain sight, see MHProNews and MHLivingNews Publisher L.A. “Tony” Kovach’s insight into the opportunity linked here. ##

 

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Submitted by RC Williams to the Daily Business News for MHProNews.

 

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