After a sharp dip brought about by three hurricanes, confidence among homebuilders in the United States (U.S.) has outshone expectations and increased more than expected for the month of October.
According to the National Association of Home Builders (NAHB), the monthly sentiment index rose to hit 68, the highest level seen since May 2017 and five points ahead of the 63 in October 2016.
“This month’s report shows that homebuilders are rebounding from the initial shock of the hurricanes,” Chairman of the NAHB, Granger MacDonald, said to CNBC. “However, builders need to be mindful of long-term repercussions from the storms, such as intensified material price increases and labour shortages.”
Due to the number of homes destroyed during the hurricanes, a shortage of labour can be observed nationwide, and had also driven the price of lumber up more than 21 per cent from the end of August, and it is continuing to rise. Fires in California have only contributed to the price spike and labour shortage.
“It is encouraging to see builder confidence return to the high 60s levels we saw in the spring and summer,” Chief Economist of NAHB, Robert Dietz, told CNBC. “With a tight inventory of existing homes and promising growth in household formation, we can expect the new home market to continue to strengthen at a modest rate in the months ahead.”