Builder confidence in the market for newly built single-family homes in December increased seven points to a level of 70 on the National Association of Home Builders/Wells Fargo Housing Market Index—the highest reading since July 2005.
The HMI’s three components all rose in December. Current sales conditions grew seven points to 76, sales expectations in the next six months increased nine points to 78 and buyer traffic went up six points to 53, the first time this component was above 50 since October 2005.
In the Northeast, the HMI’s three-month moving average increased six points to 51; in the Midwest, it rose three points to 61; in the South, it increased one point to 67; and in the West, it recorded a two-point gain to 79.
“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 in a statement. “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.”
