Prices for softwood lumber and some other building materials ease, but workers remain in short supply, according to the National Association of Home Builders.

Homebuilder confidence inched up in September for the first time in three months, as the cost of softwood lumber and some other building materials eased.

But builders still have concerns about labor shortages in the construction industry, and rising home prices that could hurt demand, the National Association of Home Builders said in releasing the results of a monthly survey of builders.

“The single-family building market has moved off the unsustainably hot pace of construction of last fall and has reached a still hot but more stable level of activity, as reflected in the September HMI,” said NAHB Chief Economist Robert Dietz, in a statement. “While building material challenges persist, the rate of cost growth has eased for some products, but the job openings rate in construction is trending higher.”

The NAHB/Wells Fargo Housing Market Index rose one point in September, to 76. When the index is above 50, that means more builders think conditions are good than poor.

NAHB/Wells Fargo Housing Market Index (HMI). Source: National Association of Home Builders.

During the recession and housing crash of 2007-2009, the HMI bottomed out at eight points in January 2009, and didn’t climb above 50 until June, 2013.

On the eve of the pandemic, the HMI was just one point of its 1999 record high of 77, registering a 76 reading in December, 2019. When the pandemic hit in March, 2020, the index plummeted to 30 the following month, amid uncertainty about how the economy would weather the storm.

The index quickly rebounded, as builders scrambled to meet pent-up demand for homes, eventually hitting 90 in November, 2020 — an all-time high in records dating to 1985. Although the HMI drifted back below 80 this summer, builder confidence remains about as high as it was right before the pandemic.

In their latest forecast, Fannie Mae economist project new home sales will grow by 11.5 percent next year, to 881,000. Existing home sales, on the other hand, are expected to fall by 3.6 percent, to 5.676 million.

Regionally, the West has been posting the strongest builder confidence numbers, although looking at a three-month moving average, the region dropped two points, to 83. The South dropped two points, to 80, while the Northeast fell two points to 72. The three-month moving average for the Midwest remained unchanged at 68.

A component of the HMI index gauging current sales rose one point to 82, the component measuring traffic of prospective buyers was up two points to 61, and the gauge of sales expectations over the next six months was unchanged at 81.

“Exurban markets have expanded the most over the last year, although inner suburbs are now experiencing an acceleration, with townhouse construction having had the best quarter in 14 years this spring,” Dietz said.

Email Matt Carter

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription