US homebuilder sentiment improves in November

Sentiment among US housebuilders unexpectedly improved in November amid strong demand, according to figures released on Tuesday.

The National Association of Home Builders/Wells Fargo housing market index rose to 83.0 from 80.0 in October, beating expectations for it to remain unchanged.

The HMI index for current sales conditions rose three points to 89.0 and the index charting traffic of prospective buyers also posted a three-point gain, to 68.0. The component measuring sales expectations in the next six months was steady at 84.0.

NAHB chairman Chuck Fowke said: "The solid market for home building continued in November despite ongoing supply-side challenges. Lack of resale inventory combined with strong consumer demand continues to boost single-family home building."

Meanwhile, NAHB chief economist Robert Dietz said that in addition to well publicised concerns over building materials and the national supply chain, labour and building lot access are key constraints for housing supply.

"Lot availability is at multi-decade lows and the construction industry currently has more than 330,000 open positions. Policymakers need to focus on resolving these issues to help builders produce more housing to meet strong market demand," he said.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "Stepping back from the immediate details, the bigger picture here is that homebuilder sentiment is now rebounding, after falling from December last year through August, as demand mean-reverted to its pre-Covid trend.

"But mortgage demand has risen strongly in recent month, pushing up sales; construction is following, with inventory still very low. We expect further gains over the next couple months."