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Trump regulatory reform sends builder confidence soaring to 12-year high

But experts expect confidence to moderate

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Builder confidence in the market for newly-built single-family homes just hit a 12-year high after seeing President Donald Trump’s actions on regulatory reform, according to the National Association of Home Builders and Wells Fargo Housing Market Index released Wednesday.

The index increased six points in March to a level of 71, the highest reading since June 2005. This is up from February’s decrease to 65.

“Builders are buoyed by President Trump’s actions on regulatory reform, particularly his recent executive order to rescind or revise the waters of the U.S. rule that impacts permitting,” said NAHB Chairman Granger MacDonald, a home builder and developer.

Derived from a monthly survey that NAHB has been conducting for 30 years, the index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as good, fair or poor.

The survey also asks builders to rate traffic of prospective buyers as high to very high, average or low to very low. Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates most homebuilders view conditions as good than poor.

But experts don’t expect this confidence to continue at its current pace, saying builders still have many challenges ahead of them for 2017.

“While builders are clearly confident, we expect some moderation in the index moving forward,” NAHB Chief Economist Robert Dietz said. “Builders continue to face a number of challenges, including rising material prices, higher mortgage rates, and shortages of lots and labor.”

All three HMI components increased in March. The component measuring current sales conditions increased seven points to 78, and the index charting sales expectations over the next six months jumped five points to 78. The component measuring buyer traffic jumped eight points to 54.

And builders aren’t the only ones with more confidence. The National Association of Realtors released a study Wednesday showing household confidence also increased to a survey high.

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