Builder sentiment posts first increase in months

home building

By Vincent Salandro | Builder

Builder confidence levels increased in January due to a modest drop in interest rates, ending a string of 12 consecutive months of builder sentiment decreases, according to the NAHB/Wells Fargo Housing Market Index (HMI). Builder confidence in the market for newly built single-family homes in January increased by four points to 35, according to the HMI.

Despite the month-over-month increase, builder sentiment remains in “bearish territory” as builders continue to face elevated construction costs, building material supply chain disruptions, and challenging affordability conditions, according to the NAHB.

“It appears the low point for builder sentiment in this cycle was registered in December, even as many builders continue to use a variety of incentives, including price reductions, to bolster sales,” says NAHB chairman Jerry Konter. “The rise in builder sentiment also means that cycle lows for permits and starts are likely near, and a rebound for home building could be underway later in 2023.”

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