Despite inflation concerns and ongoing production bottlenecks, the National Association of Home Builders released a report on Wednesday showing a modest improvement in U.S. homebuilder confidence in the month of December.
The report said the NAHB/Wells Fargo Housing Market Index inched up to 84 in December from 83 in November, reaching its highest level since a matching reading in February. The uptick came in line with economist estimates.
The modest increase by the headline index came as the index gauging current sales conditions crept up to 90 in December from 89 in November and the gauge charting traffic of prospective buyers edged up to 70 from 69.
Meanwhile, the component measuring sales expectations in the next six months held steady at 84 for the third consecutive month.
“The most pressing issue for the housing sector remains lack of inventory,” said NAHB Chief Economist Robert Dietz. “Building has increased but the industry faces constraints, namely cost/availability of materials, labor and lots.”
He added, “While 2021 single-family starts are expected to end the year 24% higher than the pre-Covid 2019 level, we expect higher interest rates in 2022 will put a damper on housing affordability.”
On Thursday, the Commerce Department is scheduled to release a separate report on new residential construction in the month of November.
Housing starts are expected to surge by 3.0 percent to an annual rate of 1.565 million in November, while building permits are expected to rise by 0.4 percent to a rate of 1.660 million.
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