Builder Confidence at 18-Year High

Superlatives are overused in this day and age, but the National Association of Home Builders can boast its Housing Market Index has never been healthier this century.

The association reported builder confidence in the market for newly built single-family homes increased by five points in December to 74. This was the highest report since July 1999, more than 18 years ago.

All three HMI components registered gains in December. The component measuring buyer traffic jumped eight points to 58, the index gauging current sales conditions rose four points to 81 and the index charting sales expectations in the next six months increased three points to 79.

Regionally, the Midwest climbed six points to 69, the South rose three points to 72, the West increased two points to 79 and Northeast inched up a single point to 54.

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, said the December jump in confidence is “a sure sign that homebuilding will ramp up if builders can secure the lots and workers they need.”

“Builder confidence has soared, as builders have been able to sell homes as quickly as they can build them,” Vitner said. “The sharp rise in buyer traffic suggests the momentum will carry over into 2018.”

NAHB Chief Economist Robert Dietz agreed. “With low unemployment rates, favorable demographics and a tight supply of existing home inventory, we can expect continued upward movement of the single-family construction sector next year,” he said.