Builder confidence in the market for newly built single-family homes rose for the seventh consecutive month in July, despite higher construction costs and interest rates and a shortage of lots, the National Association of Home Builders reported.       

Specifically, the NAHB/Wells Fargo Housing Market Index (HMI) rose one point to 56, its highest reading since June 2022. Any number over 50 indicates that more builders view conditions as “good,” rather than “poor.”    

“The lack of resale inventory means prospective home buyers who have not been priced out of the market continue to seek out new construction in greater numbers,” NAHB Chairman Alicia Huey said in a release. “At the same time, builders are troubled over rising mortgage rates approaching 7% and continue to grapple with supply-side challenges, including ongoing scarcity of electrical transformer equipment and growing concerns about lot availability.”  

The share of builders reducing home prices slid to 22% in July from 25% in June as the housing market firms and resale inventory options remain limited, NAHB noted. 

The HMI is made up of three components. The component gauging current sales conditions rose one point to 62, the gauge measuring sales expectations in the next six months slid two points to 60, and the component measuring traffic of prospective buyers rose three points to 40.    

The three-month moving average for regional HMI scores was up across the board, rising five points in the Northeast to 52, two points in the Midwest to 45, three points in the South to 58 and five-points to 51 in the West.