Builder sentiment increased two points in October to a record high of 85, according to cnbc.com. Any reading above 50 indicates a positive market; the National Association of Home Builders/Wells Fargo Housing Market Index had plunged to 30 in April.
Of the homebuilder index’s three components, current sales conditions rose two points to 90; sales expectations in the next six months increased three points to 88; and buyer traffic rose was unchanged at 74.
“The housing market continues to be a bright spot for the economy, supported by increased buyer interest in the suburbs, exurbs and small towns,” said NAHB Chief Economist Robert Dietz. “New single-family home sales are outpacing starts by a historic margin. Bridging this gap will require either a gain in construction volume or reductions in available inventory, which is already at a historic low in terms of month’s supply.”
Still, builders are struggling to increase production as they face shortages of lots, labor and materials. And although housing starts and building permits are rising slowly, they are not even close to meeting demand.