The National Association of Home Builders (NAHB) and Wells Fargo Housing Market Index (HMI) jumped five points to 83 in September, an all-time high for the index since the series was first started 35 years ago, according to a press release issued Wednesday by NAHB.
The previous highest reading the index had ever reached of 78 was set in August 2020 and matched in December 1998.
The index is based on a scale from zero to 100 and gauges builder perceptions of single-family homes sales and sale expectations for the next six months.
September was a record month for all HMI indices, including current sales conditions, sales expectations and traffic of prospective buyers.
Across the three-month moving averages for regional HMI scores, the Northeast saw the greatest gains with an increase of 11 points from the previous month to 76. However, the West had the highest HMI three-month moving average overall, at 85 points, an increase of seven points from the previous month. The South three-month moving average rose eight points to 79 and the Midwest increased nine points to 72.
NAHB noted that a shift toward suburban areas working in tandem with incredibly low interest rates have kept builders busy. However, that may translate to higher costs and delays in receiving building materials, due to high demand, low supply and 20 percent tariffs on Canadian supply.
“Lumber prices are now up more than 170 percent since mid-April, adding more than $16,000 to the price of a typical new single-family home,” NAHB Chief Economist Robert Dietz said in a statement. “That said, the suburban shift for home building is keeping builders busy, supported on the demand side by low interest rates. In another sign of this growing trend, builders in other parts of the country have reported receiving calls from customers in high-density markets asking about relocating.”