Builders more confident, no housing starts data due to shutdown

Builder confidence buoyed by lower interest rates

Builders more confident, no housing starts data due to shutdown

Rising confidence of builders in the market for newly-built single-family homes has been reflected in the latest National Association of Home Builders/Wells Fargo Housing Market Index.

The index gained 2 points in January to a reading of 58, with gains for all of its components: current conditions up 2 points to 63; expectations for the next 6 months up 3 points to 64; and buyer traffic up 1 point to 44.

There is no Census data on housing starts this week due to the government shutdown, but the NAHB estimates that single-family starts would have been up 3% year-over-year to 876,000 units.

The rise in confidence among builders corresponds to a decline in mortgage rates, helping to bring buyers, especially first-timers, into the market.

“Builders need to continue to manage rising construction costs to keep home prices affordable, particularly for young buyers at the entry-level of the market,” said NAHB Chief Economist Robert Dietz. “Lower interest rates that peaked around 5% in mid-November and have since fallen to just below 4.5% will help the housing market continue to grow at a modest clip as we enter the new year.”

Regional 3-month data
The three-month moving averages for regional HMI scores show that the Northeast dropped five points to 45; the Midwest and South both fell three points to 52 and 62, respectively; and the West registered a one-point drop to 67.

“Low unemployment, solid job growth and favorable demographics should support housing demand in the coming months,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La.