Confidence among homebuilders reaches a plateau in December
After three consecutive months of increases, homebuilder confidence stagnated in December. The National Association of Home Builders (NAHB)/ Wells Fargo The housing market index (HMI) remained stable month after month at 46.
The NAHB attributed this static reading to builders looking for a better regulatory business environment in 2025 due to the results of the 2024 presidential election. New policies under the Trump administration could offset high home prices and high mortgage rates.
The share of builders who lowered house prices (31%) remained the same compared to November. The average price decrease remained stable at 5%, as did the share of builders (60%) who used sales incentives.
In addition, the NAHB reported that the gauge of current sales conditions among homebuilders remained stable at 48. The gauge that measures the movement of potential buyers fell by one point to 31, while the component that charts sales expectations for the next six months increased by rose three points to 66. highest figure since April 2022.
“While builders express concerns that high interest rates, higher construction costs and a lack of buildable lots continue to be headwinds, they also anticipate future regulatory relief in the wake of the election,” NAHB Chairman Carl Harris said in a statement. “This is reflected in the fact that future sales expectations have risen to the highest level in almost three years.”
The three-month moving averages for the HMI rose from October to November in three of the four regions tracked by the index. The South gained two points for a ranking of 44, the Northeast rose two points to 57 and the Midwest jumped two points to 46. The West dropped one point to a ranking of 40.
Looking ahead, NAHB chief economist Robert Dietz said the trade group has reduced expected rate cuts in 2025 from 100 basis points to 75 basis points due to ongoing inflation pressures.
“Concerns about inflation risks in 2025 will ensure that long-term interest rates, like mortgage rates, remain close to current levels, while mortgage rates remain above 6%,” Dietz said in a statement.
