Builder confidence lowest since May 2015

by Steve Randall17 Dec 2018

An index of builders’ confidence in the market for newly-built single-family homes declined in December to its lowest reading since May 2015.

But despite the 4 point drop in the National Association of Builders/Wells Fargo Housing Market Index, sentiment remains in positive territory with a reading of 56. Anything above 50 is good rather than poor.

“We are hearing from builders that consumer demand exists, but that customers are hesitating to make a purchase because of rising home costs,” said NAHB Chairman Randy Noel. “However, recent declines in mortgage interest rates should help move the market forward in early 2019.”

Northeast leads regional declines
Looking at the three-month moving average for the index, the Northeast registered the largest drop – of 8 points to 50; the West was down 3 points to 68; the South was also down 3 points, to 65; and the Midwest slipped 2 points to 55.

“The fact that builder confidence dropped significantly in areas of the country with high home prices shows how the growing housing affordability crisis is hurting the market,” said NAHB Chief Economist Robert Dietz. “This housing slowdown is an early indicator of economic softening, and it is important that builders manage supply-side costs to keep home prices competitive for buyers at different price points.”

The index measuring current sales conditions fell six points to 61, the component gauging expectations in the next six months dropped four points to 61, and the metric charting buyer traffic edged down two points to 43.



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