Industry News

Builder confidence hits highest mark since June 1999

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Builder confidence rose to its highest level since June 1999, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

Last month’s Index of 76 was a 5-point increase from an upwardly revised November reading.

All three HMI components (current sales conditions, sales expectations, traffic of prospective buyers) registered gains in December.

In releasing the results, NAHB said builders are continuing to see the housing rebound that began in the spring. A low supply of existing homes, low mortgage rates, and a strong labor market contributed to the elevated confidence.

Despite the near-term positive market conditions with a 50-year low for the unemployment rate coupled with increased wage growth, we are still under building due to supply-side constraints like labor and land availability, stated Robert Dietz, chief economist at NAHB. He also noted higher development costs are hurting affordability and “dampening more robust construction growth.”

NAHB has been conducting the monthly “confidence” surveys for 30 years. It gauges builder perceptions of current single-family homes sales, sales expectations for the next six months (rated as “good,” “fair” or “poor”), and builders’ ratings of traffic of prospective buyers (using “high to very high,” “average,” or “low to very low” as the markers). Any number over 50 indicates that more builders view conditions as good than poor.

In the latest HMI index, the gauge of current sales conditions rose seven points to 84, followed by the measure of sales expectations, which edged up a point to 79, and the rating of traffic of prospective buyers, which rose four points to 58.

Regional scores based on three-month moving averages were mixed. The Northwest fell two points to 61, the Midwest increased five points to 63, the South moved one point to 76 and the West rose three points to 84.

The National Association of Home Builders is a federation of more than 700 state and local associations comprising more than 140,000 members. Its members construct about 80% of the new single-family and multifamily homes built each year in the U.S.

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