F Forecasts

NAHB Housing Market Index Could Surprise Downward

17 May, 2021
NAHB Housing Market Index

On Monday, the National Association of Home Builders (NAHB) will release it Housing Market Index. According to the Bloomberg consensus, the NAHB Housing Market Index is expected to remain unchanged in May at 83 (but well above the expansion level of 50).

→ Several surveys and reports suggest that risks are skewed to the downside:

  • Buying conditions deteriorated.
  • Building costs skyrocketed, dampening hombeuilders’ margin.


1. Buying conditions deteriorated

Several indicators confirmed that buying conditions deteriorated recently due to elevated housing prices and a lack of inventory. Last Friday, the University of Michigan Consumer Survey showed that, in May, buying conditions for Houses crashed to the lowest since January 1983. Earlier this month, the Fannie Mae Home Purchase Sentiment Index for April also retraced. The report highlighted “Consumer sentiment toward buying homes reached the lowest level in our survey’s ten-year history; unsurprisingly, respondents overwhelmingly cited the lack of supply and high home prices as primary reasons for their pessimism“.

2. Building costs skyrocketed

Several reports suggest that the cost of construction increased dramatically. In addition to regulatory costs, homebuilders faced a surge of land and material prices. As an example, “Soaring lumber prices that have tripled over the past 12 months has caused the price of an average new single-family home to increase by $35,872, according to new analysis by the NAHB Economics team.”