Builder confidence in the market for newly built single-family homes held steady this month, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).
The latest HMI reading of 46 was unchanged from November; any number over 50 indicates that more builders view conditions as good than poor.
The HMI index gauging current sales conditions held steady at 48 while the gauge charting traffic of prospective buyers dipped by one point to 31. The component measuring sales expectations in the next six months rose three points to 66, the highest level since April 2022.
Looking at the three-month moving averages for regional HMI scores, the Northeast increased two points to 57, the Midwest moved two points higher to 46, the South posted a two-point gain to 44 and the West fell one point to 40.
“While builders are expressing concerns that high interest rates, elevated construction costs and a lack of buildable lots continue to act as headwinds, they are also anticipating future regulatory relief in the aftermath of the election,” said NAHB Chairman Carl Harris, a custom home builder from Wichita, Kansas. “This is reflected in the fact that future sales expectations have increased to a nearly three-year high.”
“NAHB is forecasting additional interest rate cuts from the Federal Reserve in 2025, but with inflation pressures still present, we have reduced that forecast from 100 basis points to 75 basis points for the federal funds rate,” added NAHB Chief Economist Robert Dietz. “Concerns over inflation risks in 2025 will keep long-term interest rates, like mortgage rates, near current levels with mortgage rates remaining above 6%.”
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