Builder confidence in the market for newly-built single-family homes increased five points to 76 in December off an upwardly revised November reading, according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released today. This is the highest reading since June of 1999.

“Builders are continuing to see the housing rebound that began in the spring, supported by a low supply of existing homes, low mortgage rates and a strong labor market,” says NAHB chairman Greg Ugalde, a home builder and developer from Torrington, Conn.

Derived from a monthly survey that NAHB has been conducting for 30 years, the HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three HMI components registered gains in December. The HMI index gauging current sales conditions rose seven points (84), the component measuring sales expectations in the next six months edged up one point (79) and the measure charting traffic of prospective buyers increased four points (58).

“While we are seeing near-term positive market conditions with a 50-year low for the unemployment rate and increased wage growth, we are still underbuilding due to supply-side constraints like labor and land availability,” says NAHB chief economist Robert Dietz. “Higher development costs are hurting affordability and dampening more robust construction growth.”

Looking at the three-month moving averages for regional HMI scores, the Northeast fell two points to 61, the Midwest increased five points to 63, the South moved one point higher to 76 and the West rose three points to 84.

News

Leave a Reply

Your email address will not be published. Required fields are marked *