Storms Batter Confidence As Builders See Shortages

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Housing Market Index DROPPED four points in September (including a one-point downward revision of the August reading) to 64 (out of 100);
  • The assessments of future (six months forward) sales and buyer traffic each fell one point
  • By region, builder confidence FELL in August in the Midwest (down six points) and in the South (down four points) while improving in the West (three points) and in the Northeast (one point).

Image result for builder confidence index

Although rebuilding activity in the wake of Hurricanes Harvey and Irma will likely take years, builder confidence, as measured by the National Association of Home Builders (NAHB) slipped three points in early September. Th e confidence measure for August was revised down one point for a full drop of four points to a still-positive 68.

The NAHB’s confidence gauge – the Housing Market Index (HMI) – tracks assessments of current home buying, future (six months out) home buying and buyer traffic. The three-point drop in the September HMI matched June and March for the steepest one-month slide in more than three years.  The Index did not fall in the wake of Superstorm Sandy five years ago but did drop following Hurricane Katrina in 2005.

Hurricanes Harvey and Irma are likely to cause a tighter supply of labor and materials needed for building new homes across the country as material and equipment are diverted to Louisiana, Texas, and Florida.  Those supply constraints could mean higher costs reflected in the dip in confidence.

That said, the reading of 64 remains one of the higher index readings since the end of the Great Recession. The index briefly passed 70 (hitting 71 in March of this year).

The Census Bureau and Department of Housing and Urban Development will report tomorrow on new housing permits and starts albeit for August, before the storms made landfall.

Hear Mark Lieberman every Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:20 am Eastern Time. Follow Mark Lieberman on Twitter at @ foxeconomics.

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