Homebuilder Sentiment Rises for First Time in Five Months

Builders of single-family homes in the U.S. are feeling a bit better about the industry.

A gauge of homebuilder sentiment ticked up in September, the first month-to-month gain for the index since April, to a score of 76, the National Association of Home Builders said Monday.

Economists had forecast the  NAHB/Wells Fargo Housing Market Index to remain at the 75 level hit in August.

Homebuilder sentiment initially plunged in the early days of the pandemic, only to soar rapidly as it became clear that working from home and social distancing desires were driving up demand for houses. The index, which has averaged 52 in data going back to 1985, jumped to 90 in November, the all-time high.

But labor shortages and skyrocketing lumber costs took their toll on homebuilder sentiment and the index has been slowly declining for most of 2021.

Lumber prices, however, have come down dramatically, falling from a high of $1,600 per 1000 board feet in May to around $400 recently.

Two of the indexes components, current sales conditions and foot traffic, improved. Expectations for sales six months into the future held steady. All three are elevated compared with historically normal levels.

The changes in builder sentiment were uneven around the country. The Northeast and the West saw sentiment fall in September to the worst levels since last summer. The Midwest and the South rose.