The Economy

Hurricane Harvey Buffets Builder Confidence

The National Association of Home Builders index falls 3 points but "builder confidence is still on very firm ground."
Matthew HellerSeptember 18, 2017

The recent hurricanes in Texas and Florida appear to have shaken the confidence of home builders.

The National Association of Home Builders on Monday reported that its housing market index (HMI) fell 3 points to 64 in September amid concerns that the hurricanes will make it difficult for builders to find workers and materials. The August reading was revised downward by a point.

“The recent hurricanes have intensified our members’ concerns about the availability of labor and the cost of building materials,” NAHB Chairman Granger MacDonald said in a news release. “Once the rebuilding process is underway, I expect builder confidence will return to the high levels we saw this spring.”

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The index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” Scores are used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three HMI components posted losses in September but remain at healthy levels. The component gauging current sales conditions fell four points to 70 , the component charting sales expectations in the next six months dropped four points to 74, and the component measuring buyer traffic slipped a single point to 47.

“Despite this month’s drop, builder confidence is still on very firm ground,” said NAHB Chief Economist Robert Dietz. “With ongoing job creation, economic growth and rising consumer confidence, we should see the housing market continue to recover at a gradual, steady pace throughout the rest of the year.”

Regionally, the index for the West increased 3 points, to 77 and the Northeast rose 1 point, to 49, while the South fell a point, to 66, and the Midwest slipped 3 points, to 63.

“The Commerce Department is due to report housing-starts data for August,” MarketWatch noted. “Given Hurricane Harvey, starts in the South may have dropped sharply.”

Harvey also appears to have hit U.S. retail sales last month and the University of Michigan reported last week that its Index of Consumer Sentiment fell 1.5% to 95.3 in the first part of September.