New residential construction is vital to keeping the housing market balanced. After all, there’s no easier way to increase the number of homes for sale than to build more homes. And, in today’s market, where inventory is low and demand is high, new home construction is more important than ever. If home builders build enough homes to narrow the gap between supply and demand, it’ll help give buyers more choices and keep prices from rising too quickly.
That’s why the National Association of Home Builders’ monthly measure of home builder confidence is a closely watched barometer. In September, their Housing Market Index hit its highest point in the survey’s 35-year history. The index scored an 83 on a scale where any number above 50 indicates more builders view conditions as good than poor.
Robert Dietz, NAHB’s chief economist, says demand is high and moving to the suburbs. “The suburban shift for home building is keeping builders busy, supported on the demand side by low interest rates,” Dietz said. If the current trend continues, it could lead to a better balanced market and improved affordability conditions for buyers. (source)