Homebuilder confidence highest since 2005

Builder confidence has increased at the end of the year on the expectation of reduced regulations

Homebuilder confidence highest since 2005
Builder confidence rose seven points last month, hitting its highest point since July of 2005.

The NAHB/Wells Fargo Housing Market Index rose to 70 last month, a seven-point increase from its previous reading. NAHB Chair Ed Brady said increase in builder confidence can mainly be associated with post-election sentiments, with builders optimistic that President-elect Donald Trump will carry out his promise to cut regulations that many feel are damaging to small businesses and housing affordability.

“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,” Brady said. 

“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.”

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