U.S. homebuilders are starting to look downright giddy. The National Association of Homebuilders survey of builder confidence popped to its highest level since January, 2006.
According to the survey, “Builders are seeing more motivated buyers coming through their doors as the inventory of existing homes for sale continues to tighten”. Indeed, the household formation rate has returned to its historical average, after being severely depressed during the Great Recession. Foreclosures have significantly subsided, which is removes a significant headwind. Importantly, the recent rise in mortgage rates has so far not been problematic for builders – all four regions reported increased activity.
Bottom line: residential construction will continue to make a solid contribution to GDP in 2013.
Source: BCA Research
