The U.S. homebuilder confidence index continues to reach new heights, rising to 85 in October, according to data from the National Association of Home Builders released on Monday. The reading was stronger than the median forecast of 83, marking the sixth straight month that the index has exceeded the consensus estimate.
All three components of the index set records in October or matched their highest readings. Sales of single-family homes rose 2 points to 90, prospective sales increased 3 points to 88, and homebuyer traffic remained unchanged month over month at 74.
The Northeast and West had the largest increases, both increasing 7 points to 88 and 95, respectively. The South and Midwest fell 2 and 1 points, respectively, to 83 and 77.
The housing market has been one of the few bright spots in the economy as buyers, lured by declining mortgage rates and seeking refuge from crowded cities during the pandemic, look for more space to work, study and play.
One potential risk for homebuilders, though, is the increasing cost of construction. With shortages of labor and lots to build on, as well as increasing prices of lumber, the cost of building a new home has increased. Lumber costs have increased by more than 170% since April, according to the NAHB.
This risk, though, appears to be mitigated as housing inventories remain suppressed, resulting in rising home prices.
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