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Homebuilder confidence in the U.S. jumped in November, hitting another record high as buyers swarmed sales offices to take advantage of the lowest mortgage rates in history.
The gauge of builder sentiment rose to 90, the highest in data going back to 1985 and up from 85 in October, according to the National Association of Home Builders/Wells Fargo Market index released Tuesday. It was third straight month of record-high readings and beat the median forecast of 85 in a Bloomberg survey of economists.
Home construction has been a bright spot for the U.S. economy, plagued by high unemployment and the raging coronavirus. Americans who can afford to buy houses are pouncing on sub-3% rates for 30-year mortgages, and many are choosing new communities in the suburbs, partly because existing-home listings are growing more scarce.
“In the short run, the shift of housing demand to lower-density markets — such as suburbs and exurbs with ongoing low resale-inventory levels — is supporting demand for homebuilding,” Robert Dietz, the group’s chief economist, said in a statement. “However, affordability remains an ongoing concern, as construction costs continue to rise and interest rates are expected to move higher as more positive news emerges on the coronavirus vaccine front.”
The spike in demand has created challenges for builders because labor remains tight, materials costs are rising and companies are running out of finished lots to build on.
The seasonally adjusted index measures builder perceptions of single-family home sales and expectations for the next six months. A number above 50 indicates that more builders view conditions as good than poor. Sixty-nine percent of survey responses were received before the presidential election was called for Joe Biden on Nov. 7.
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