Residential construction and its logical impact on builder confidence has been one of the biggest pleasant surprises of an otherwise very unpleasant catalyst (i.e. the pandemic). Construction has progressed just as fast as material and labor availability have allowed and builder confidence has risen accordingly. According to the National Association of Homebuilders (NAHB)/Wells Fargo Housing Market Index (HMI), builder confidence topped out in late 2020, but has remained in record high territory since then. The overall index is still much higher than than the pre-covid era, but it has been declining moderately since the most recent peak in December. The headline confidence number is a combination of several component indices. These include things like buyer traffic and the 6 month sales outlook. It’s there we see the sharper move as builders expect a combination of material shortages, high prices, and rising rates to put a crimp on sales volume. Here too, the index is still in historically good shape, but it’s the only component that is back in line with 2015-2019’s range (the horizontal orange line marks the just-released level for March).