Builder Confidence Drops from 18-Year High
Builder confidence in the market for newly built single-family homes fell slightly in January, the National Association of Home Builders reported yesterday.
The NAHB/Wells Fargo Housing Market Index fell to 72 in January, down two points from the 18-year high of 74 reached last month. The three HMI components registered relatively minor losses in January. The index gauging current sales conditions dropped one point to 79; the component charting sales expectations in the next six months fell a single point to 78; and the index measuring buyer traffic fell four points to 54.
Regional three-month moving averages saw the West rise two points to 81, the South increase one point to 73, the Midwest up a single point to 70 and Northeast up five points to 59.
“The HMI gauge of future sales expectations has remained in the 70s, a sign that housing demand should continue to grow in 2018,” said NAHB Chief Economist Robert Dietz. “As the overall economy strengthens, owner-occupied household formation increases and the supply of existing home inventory tightens, we can expect the single-family housing market to make further gains this year.”
Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said bad weather likely cut down on buyer traffic. “Despite the drop, builder confidence at the start of 2018 is much stronger than it was at the start of last year,” he said.
Last week, the Mortgage Bankers Association reported December mortgage applications for new home purchases increased by 7.8 percent from a year ago but fell by 18 percent from November. The MBA Builder Applications Survey said while builder applications fell in December, they remained nearly 16 percent higher from a year ago.
Homebuilders remain exceptionally optimistic, Vitner added. “Buyer traffic is strong and attitudes toward development are now more favorable,” he said. “The rising costs of building materials and labor remains a concern but should not upend the strong momentum currently in place.”
