Builder Confidence Surges in December

By Mark Lieberman

Managing Director and Senior Economist

Data Highlights:

  • Housing Market Index JUMPED five points in December to 76 (out of 100);
  • All three components of the HMI ROSE in December;
  • The outlook for sales in the near term ROSE seven points to 84
  • The outlook for sales six months out ROSE one point to 79;
  • Buyer traffic IMPROVED four points to 58;
  • Each of the three components was revised upward by one point for November;
  • Regionally, the index IMPROVED in three of the four census region, slipping only in the Northeast from 63 to a still sold 61.

Trends:

  • The total HMI to its highest level since June 1977 (77)
  • The 7-point month-month increase in current sales was the largest one-month jump since July 2015;
  • The outlook for sales six months out is at its highest level since March 2018;
  • Buyer traffic is at its highest level since December 2017;

Data Source: National Association of Home Builders (NAHB)

Image result for home building

New home sales may be treading water but as far as home builders are concerned, they’re setting records.

Builder confidence rose to its highest level in 20 years in early December (based on sentiment at the end of November) as the outlook for current sales, for sales six months forward and buyer traffic all rose.

The index has been over the break-even point, 50, for more than five years.

The increase in confidence came despite the most recent data for new home sales which showed a slight dip in the seasonally adjust annualized rate of sales, falling in October (the most recent data) to 733,000 from 738,000. The sales pace has, despite the October data, been inching up this year, averaging 683,000 for the first ten months, up almost 9.5 percent from 624,000 in the first 10 months of 2018.

Not only have falling mortgage rates resulted in the sales boost, but prices too have been slipping. The median price of a new single-family home in October was $316,7000, down 3.5 percent from October 2018. In October, the rate on a 30-year fixed-rate loan averaged 3.69 percent (…and in November that rate averaged 3.70 percent).

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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