Builder Confidence Dips in December But Remains Strong

By Mark Lieberman

Managing Director and Senior Economist

Data Highlights:

  • Housing Market Index SLIPPED two points in January to 72;
  • The index of current sales FELL one point to 79, the index of future (six months hence) sales also DROPPED one point to 78 and buyer traffic FELL four points to 54;
  • By region, builder confidence Fell in three of the four Census regions, improving only in the Northeast.

Trends:

  • The drop in confidence was the first since last September;
  • At 72, the index is at its second highest level since June 2005
  • The index has been over the tipping point of 50 for 56 straight months and has been up year-year for four straight months;
  • The increase in the index in the Northeast reversed an eight-point decline in the index for that region in December.

Data Source: National Association of Home Builders

Image result for builder confidence index

The National Association of Home Builders (NAHB) Housing Market Index (HMI) offered the first glimpse into the impact of the changes in the changes in the federal tax laws and the early reading is slightly negative.

While the index (also considered a measure of builder confidence) slipped slightly, the decline may be too small to offer any deep read on the immediate impact of the tax changes on the nation’s housing market.

To be sure, the tax bill signed into law just before Christmas, removes or limits some of the incentives of home buying by capping the amount of real estate taxes and mortgage interest that can be deducted on federal tax returns.

What is apparent is the tax changes did little to slow building activity – at least according to survey participants – who may not learn for a while whether the market has changed. After all, this survey is based on builder not buyer attitudes.

The Census Bureau and Department of Housing and Urban Development will report tomorrow on new housing permits and starts albeit for December.

Hear Mark Lieberman every Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:20 am Eastern Time. Follow Mark Lieberman on Twitter at @ foxeconomics.

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