Business is booming.

Pent-up demand bolsters builder confidence in March

The HMI index gauging current sales conditions in March grew two points to 49, and the gauge measuring traffic of prospective buyers climbed three points to 31 – the strongest traffic reading since September 2021. The component charting sales expectations in the next six months dropped one point to 47.

“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 remain a critical constraint for prospective home buyers,” said NAHB chief economist Robert Dietz. “For example, 40% of builders in our March HMI survey currently cite lot availability as poor. And 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 (AD&C) loans for builders across the nation. When AD&C loan conditions are tight, lot inventory constricts and adds an additional hurdle to housing affordability.”

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