January Builder Confidence Dips Slightly

Builder confidence in the market for newly built single-family homes fell by two points in December, the National Association of Home Builders reported yesterday.

The NAHB/Wells Fargo Housing Market Index fell to 67 from a downwardly revised December reading of 69. The component gauging current sales conditions fell three points to 72; the index charting sales expectations in the next six months registered a two-point decline to 76; and the component measuring buyer traffic edged one-point lower to 51. Any number over 50 indicates that more builders view conditions as good than poor.

Regionally, the Northeast rose by two points to 52; the Midwest posted a three-point gain to 64. The South and West each held steady at 67 and 79, respectively.

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., noted the January decline came on the heels of a six-point gain in December; he said the broad-based decline suggested a “rebalancing” following the post-election surge.

“While challenges for the housing market remain in place, we expect continued gradual improvement in home sales and single-family construction in the year ahead,” Vitner said.

NAHB Chief Economist Robert Dietz said builders expect solid 10 percent growth in single-family construction in 2017, adding to the gains of 2016. “Concerns going into the year include rising mortgage interest rates as well as a lack of lots and access to labor,” he said.

Last week, the Mortgage Bankers Association reported mortgage applications for new home purchases increased by 2 percent in December from a year ago but fell by 14 percent from November.

The MBA Builder Application Survey said new single-family home sales came in at a seasonally adjusted annual rate of 478,000 units in December, an 18.7 percent decrease from November (588,000). On an unadjusted basis, MBA estimated 35,000 new home sales in December, a decrease of 14.6 percent from 41,000 new home sales in November.