There are some in the mortgage and finance industry that have preparing for a burst in the thriving market, but builder predictions combat these theories. This month brings an air of confidence to home builders and real estate companies as the Housing Market Index (HMI) reaches an all time high for the year, the highest since October 2015. For months the HMI has remained stagnant and steady at 60 but September shows a 5 point increase. Builders have found confidence to continue projects amid reports of the housing bubble popping with the surprise increase in the HMI. This index is ranked by combining information from builders regarding interest in single family homes and their prospective sales six months into the future. Any HMI number over 50 indicates that builders are confident that they will see good market conditions for the next season. Since August there have been increases in each component of builder rankings, a trend that many experts from the National Association of Home Builders see continuing well into 2017.
In the last year Americans are seeing steady gains in jobs alongside all time low mortgage rates, which only furthers the confidence for building companies. In all four US regions builders saw gains in their confidence for the first time since 2005 going into the final season of the year. Chairman of the NAHB Ed Brady stated that “builders in many markets across the nation are reporting they are seeing more serious buyers, a positive sign that the housing market continues to move forward”, so what could stop the industry from continuing to expand? The most simple thing: resources. Mortgage rates, serious buyers, builder confidence and job security should be the perfect storm for a huge boom in home building and market growth, but there are issues with land availability, accessible labor and building materials.
Finding the means to build has been a common problem among developers, agriculture and builders as land acquisition continues to charge into elusive territory. This common issue paired with the lack of building materials and workers does pose cause for concern amongst builders in the current housing market. From the UK to New Zealand to Boise, builders have been forced to get more creative with how they manage labor and supply in order to complete projects on time as these resources remain tapped out. It has been shown that those building single family homes are having more of an issue with building materials and supplies while larger commercial builders are dealing with the lack of skilled tradesman.
If builders can continue to adapt to the shortage of workers, find land to build on and acquire supplies to build with they can surely take advantage of this market that is primed for new development. Although past predictions warned of rising interest rates and declining single family home sales, builder confidence seems to quell those fears. The industry is still booming and each facet of the business continues to flourish in its own right. Assuming that there can be creative solutions to the problems builders are currently facing, it is surely going to be a great year for builders, mortgage lenders and real estate agents in 2017.