Despite the positive news, sentiment remains in bearish territory as builders continue to face challenges such as elevated construction costs, building material supply chain disruptions, and affordability conditions. Many builders are using incentives such as price reductions to bolster sales.
“It appears the low point for builder sentiment in this cycle was registered in December, even as many builders continue to use a variety of incentives, including price reductions, to bolster sales,” said NAHB chairman Jerry Konter. “The rise in builder sentiment also means that cycle lows for permits and starts are likely near, and a rebound for home building could be underway later in 2023.”
NAHB chief economist Robert Dietz added that while the organization is forecasting a decline for single-family starts this year compared to 2022, “it appears a turning point for housing lies ahead.”
“In the coming quarters, single-family home building will rise off of cycle lows as mortgage rates are expected to trend lower and boost housing affordability,” Dietz said. “Improved housing affordability will increase housing demand, as the nation grapples with a structural housing deficit of 1.5 million units.”
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