American homebuilders are feeling more confident amid a rise in consumer demand and a drop in lumber prices.
The recent boost follows months of declining sentiment among homebuilders nationwide, according to a report by the National Association of Homebuilders and Wells Fargo. It was first reported by Bloomberg. The more positive feeling is in line with a rising six-month home sales outlook along with a jump in prospective buyer traffic.
Improving market momentum could be attributed in part to a strong job market, benefits from tax cuts and lower lumber prices, which had briefly jumped to a record high in May amid a perfect storm of challenges. Those included U.S. tariffs on Canadian wood imports, wildfires and a shortage of freight trains to transport lumber.
But the news isn’t all good. In recent months, many major metro areas have seen a slowdown in the number of homes sold across the country. More home construction will help: the National Association of Realtors said dwindling inventory was a contributing reason for the diminishing sales numbers.
Rising interest rates could further hamper the market, some experts say. The Federal Reserve has hiked interest rates three times this year, and is expected to raise rates once more in December. [Bloomberg] — Dennis Lynch