Dive Brief:
- Builder confidence in the market for new single-family construction shot up six points from February to a reading of 71 in March on the National Association of Home Builders/Wells Fargo Housing Market Index, marking the highest level recorded since June 2005.
- NAHB Chairman Granger MacDonald said the index was bouncing back on President Donald Trump's actions to roll back regulations — particularly his recent order to revoke or change the Waters of the U.S. measure that influences permitting.
- All three HMI measures saw an uptick in March, with current sales conditions rising seven points to 78, sales expectations increasing five points to 78 and buyer traffic surging eight points to 54.
Dive Insight:
Despite the growth in builder confidence, the index could see a leveling off as builders face headwinds from rising business costs, according to NAHB Chief Economist Robert Dietz. Climbing material costs, increasing mortgage rates and the persisting labor and lot shortage stand to dampen builder prospects in the coming months.
Still, analysts say a Trump presidency could continue to buoy overall construction industry optimism with ambitious proposals to push forward high-stakes projects like the U.S.–Mexico border wall, Keystone and Dakota Access pipeline projects and the promise of a $1 trillion injection for the nation's infrastructure. With the administration's platform of rolling back, updating or revoking regulations, some builders are hopeful that the president's regulatory stance could result in lower construction costs and ease stress on the market.
While a surge in national infrastructure projects could give a much-needed boost to the market, residential construction continues to play a vital role in measuring the economy's strength. With January's increase in residential construction starts and rise in building permit authorizations, steady growth could be in the forecast for the housing market.
