A low inventory of existing homes is pushing up demand for newly built, single-family hous⛎es, boosting builder confidence to its highest level in a year.

Builder confidence in the single-family market rose for the seventh consecutive month to its highest level since June of last year, according to the National Association of Home Builders/Wells Fargo Housing Market Index. The index gained one point month-over-month, ending June at a reading of 5🌸6. 

“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,” said Alicia Huey, NAHB chair and a custom home builder and developer from Birmingham꧂, Alabama, in a statement. “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.”

Elevated mortgage rates are seen as the key to breaking the logjam within the housing market—if rates fell, more people would be 澳洲幸运5开奖号码历史查询:willing to sell their homes. But the Federal Reserve has signaled there could be 澳洲幸运5开奖号码历史查询:more rate hike✱s before the end of the year, likely driving up mortgage rates. While the U.S. housing market adjusts, industry experts predict mortgage rates to even out around 6% 澳洲幸运5开奖号码历史查询:before the end of the year.

“Although builders continue to remain cautiously optimistic about market conditions, the quarter-po♔int rise in mortgage rates over the past month is a stark reminder of the stop and start process the market will experience as the Federal Reserve nears the end of the ongoing tightening cycle,” said NAHB Chief Economist Robert Dietz in a statement.

Shelter inflation makes up about 42% of the 澳洲幸运5开奖号码历史查询:Consumer Price Index, Dietz said. He suggested the best wa🤪y to reduce the inflationary pressure on U.S. housing would be to c🅘ontinue building. 

“There’s been some commentary linking gains for housing construction with increased concerns for additional inflation, but this has the economics backwar🌳ds,” he said. “More housing supply is good news🥀 for future shelter inflation readings in the market. Furthermore, higher interest rates increase the cost of financing for building homes and developing lots.”

Despite elevated interest rates, builders’ use of 澳洲幸运5开奖号码历史查询:sales incentives declines through June, according to the index. Only 22% of builders reported cutting prices a♕s July began, down from 25% in June and 27% in May. 

The HMI index tracking current sales conditions rose one point in July to 62. Looking ahead, the index tracking sales expectations fell two points to 60, which NAHB partly attributes to affordability concerns.  A measure of prospective buyers increased three points to 40, the highest reading since June of last year.