Builder confidence surged in November, hitting another record high as buyers flooded sales offices to take advantage of the lowest mortgage rates in history.
According to the National Association of Home Builders / Wells Fargo Market's index released Tuesday, home builders sentiment rose to 90, the highest data from 1985 and 85 in October. It was the third consecutive month of record highs, beating the median forecast of 85 in a Bloomberg poll of economists.
Housing construction was a ray of hope for the US economy, which was plagued by high unemployment and the raging coronavirus. Americans who can afford to buy homes are betting on mortgage rates below 3% on 30-year mortgages, and many are choosing new communities in the suburbs, in part because inventory real estate offers are becoming increasingly scarce.
"In the short term, shifting demand for residential real estate to lower density markets – such as suburbs and suburbs with persistently low resale inventory – supports housing demand," said Robert Dietz, the group's chief economist, in a statement. "Affordability remains an issue, however, as construction costs continue to rise and interest rates are expected to rise as more positive news emerges about the coronavirus vaccines."
The rise in demand has posed challenges for builders as labor continues to be scarce, material costs are rising and companies are running out of finished land to build.
The seasonally adjusted index measures building owners' perception of single-family home sales and expectations for the next six months. A number above 50 indicates that more builders see the conditions as good than bad. 69 percent of the polls were received before Joe Biden's presidential election on November 7th.