Builder confidence in the market for newly-built single-family homes reached its highest level since July 2005, according to the latest report from the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

The HMI had shown that builder confidence in December had risen seven points to a level of 70, and all three HMI categories were on the rise as well. Current sales conditions jumped seven points to 76, and sales expectation over the next six months climbed nine points to 78. Buyer traffic charts increased six points to 53, marking the first time this gauge has topped 50 since October 2005, according to the HMI.

Looking at the three-month moving averages for regional HMI scores, the Northeast rose six points to 51, the Midwest posted a three-point gain to 61, the South rose one point to 67, and the West registered a two-point gain to 79.

“This notable rise in builder sentiment is largely attributable to a post-election bounce, as builders are hopeful that President-elect Trump will follow through on his pledge to cut burdensome regulations that are harming small businesses and housing affordability,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill. “This is particularly important, given that a recent NAHB study shows that regulatory costs for home building have increased 29 percent in the past five years.”

“Though this significant increase in builder confidence could be considered an outlier, the fact remains that the economic fundamentals continue to look good for housing,” said NAHB Chief Economist Robert Dietz. “The rise in the HMI is consistent with recent gains for the stock market and consumer confidence. At the same time, builders remain sensitive to rising mortgage rates and continue to deal with shortages of lots and labor.”

SOURCE: NAHB

Erik Sandstrom
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