Builder confidence rose 2 points in the latest National Association of Home Builders’ Housing Market Index, but economists fear lending challenges in the wake of bank failures this month.

In these times, double down — on your skills, on your knowledge, on you. Join us Aug. 8-10 at Inman Connect Las Vegas to lean into the shift and learn from the best. Get your ticket now for the best price.

Builder sentiment logged a slight increase in March, but the future remains shrouded in uncertainty as developers brace for hurdles resulting from the fallout from the abrupt failures of Silicon Valley Bank and Signature Bank, new data released Wednesday from the National Association of Home Builders shows.

Builder sentiment for single-family homes rose two points on the Wells Fargo/National Association of Home Builders Housing Market Index , to 44, marking the third straight monthly increase, according to the data.

New homebuilders encountered pent-up demand in the early months of 2023, the NAHB said, but how the rest of the year will play out is uncertain after mortgage rates have risen again.

“Even as builders continue to deal with stubbornly high construction costs and material supply chain disruptions, they continue to report strong pent-up demand as buyers are waiting for interest rates to drop and turning more to the new home market due to a shortage of existing inventory,” NAHB Chairman Alicia Huey said in a statement. “But given recent instability concerns in the banking system and volatility in interest rates, builders are highly uncertain about the near- and medium-term outlook.”

Stress on the banking sector resulting in the failures of Silicon Valley Bank and Signature Bank has temporarily reduced long-term interest rates, which will likely improve home sales in the short-term. But homebuyers are still contending with low inventory and high costs.

“While financial system stress has recently reduced long-term interest rates, which will help housing demand in the coming weeks, the cost and availability of housing inventory remains a critical constraint for prospective homebuyers,” NAHB Chief Economist Robert Dietz said in a statement. “For example, 40 percent of builders in our March HMI survey currently cite lot availability as poor.”

Increased pressure on regional banks will also effect builders’ ability to secure loans, Dietz pointed out, which will further effect affordability.

“A follow-on effect of the pressure on regional banks, as well as continued Fed tightening, will be further constraints for acquisition, development and construction loans for builders across the nation,” he said. “When AD&C loan conditions are tight, lot inventory constricts and adds an additional hurdle to housing affordability.”

The index is derived from a monthly survey of homebuilders that asks builders to rate perceptions of current single-family home sales and sales expectations as “good” “very good” or “poor” and buyer traffic as “high to very high,” “average” or “low to very low.”

The index tracking current sales condition in March rose two points to 49, the measure of prospective buyers increased three points to 31 while the gauge of sales expectations fell one point to 47, according to the NAHB.

Email Ben Verde

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