Builder confidence ticks upward in September

While lumber prices decline, home builders continue to face supply chain and labor challenges.
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The National Association of Home Builders (NAHB) reported that builder confidence inched up in September due to lower lumber prices and strong housing demand.

But the housing sector continues to face 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).

Builder sentiment has been gradually cooling since the HMI hit an all-time high reading of 90 last November. 

According to the NAHB, the September data shows 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.

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The NAHB said that it expects housing affordability to 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.

NAHB Chief Economist Robert Dietz said, regionally, the NAHB continues to see growth in the South and the West, particularly the Mountain West. 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.

The full HMI tables can be found at

The latest Monthly New Residential Construction report from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, featuring August housing starts and permits data, will be released on Sept. 21.