Home Builder’s Wells Fargo Housing Market Index rose to 90 in November 2020, up from 71 recorded in the comparable month of 2019, according to the NAHB press release. The construction market for single-family homes soared to its third record high.

  • Overall, new home sales in 2020 have risen by almost 17% year to date on historically low mortgage rates, favorable demographics, and ongoing shifts to suburbs.
  • Current sales conditions rose 6 points to 96, sales expectations for the next six months increased 1 point to 89, while buyer traffic was up 3 points to 77
  • The homebuilders are benefiting from low supply of existing homes for sale and desire to live in the suburbs due to shifts brought by the pandemic.
  • Regionally, homebuilder sentiment rose the highest in the Midwest by 6 points to 80, followed by South and West by 4 points to 86 and 94, respectively. Northeast recorded 2 points increases to 83
  • Affordability remains a concern as construction costs and interests are expected to rise as more positive news of the coronavirus vaccine emerges. 
  • Regulatory risks are also a top concern next year, given material supply-side constraints that continue to be experienced.

Fig: NAHB/Wells Fargo Housing Market Index (HMI)

Fig: NAHB/Wells Fargo Housing Market Index (HMI)

SPDR S&P Homebuilders ETF is currently declining. XHB is down 0.56%