Homebuilder confidence in the market of new single-family homes stabilized in the month of January, increasing two points to 58, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index.
“The gradual decline in mortgage rates in recent weeks helped to sustain builder sentiment,” NAHB Chairman Randy Noel said. “Low unemployment, solid job growth and favorable demographics should support housing demand in the coming months.”
NAHB Chief Economist Robert Dietz explained that builders need to rein in increasing construction costs to keep home prices affordable for young prospective homebuyers.
“Builders need to continue to manage rising construction costs to keep home prices affordable, particularly for young buyers at the entry-level of the market,” Dietz said. “Lower interest rates that peaked around 5% in mid-November and have since fallen to just below 4.5% will help the housing market continue to grow at a modest clip as we enter the new year.”
NAHB noted in its release that due to the ongoing government shutdown, there are no government figures on housing starts and permits due to be released. The group said it estimates that December’s government data would show single-family starts ended 2018 totaling 876,000 units, a 3% gain over the 2017 total of 848,900, but noted that a slowdown in sales during the fourth quarter means that there are some elevated new home inventories in some markets.
The report noted that all HMI indices posted increases in January. The index measuring current sales conditions increased two points from last month to 63. The component charting expectations in the next six months rose three points to 64 and the metric tracking buyer traffic increased one point to 44.
According to the report, the three-month moving averages for regional HMI scores all experienced a drop. The Northeast dipped five points to 45; the Midwest fell three points to 52; the South dipped three points to 62; and the West saw a one point decrease to 67 in January.