Housing MarketReal Estate

Homebuilder confidence weakens in January

Homebuilder index falls one point to 75 in January

Homebuilder confidence slightly fell this month thanks to labor and supply concerns, according to January’s Housing Market Index.

The National Association of Home Builders and Wells Fargo, which publish the monthly report, revealed sentiment slipped by one point to 75.

“With the Federal Reserve on pause and attractive mortgage rates, the steady rise in single-family construction that began last spring will continue into 2020,” said NAHB Chief Economist Robert Dietz. “However, builders continue to grapple with a shortage of lots and labor while buyers are frustrated by a lack of inventory, particularly among starter homes.

This month, the index measuring current sales conditions fell to 81 points, while buyer traffic grew to 58 points and sales expectations over the next six months held its ground at 79 points.

The three-month moving averages for regional HMI scores show while the South held steady at 76 points, the Northeast rose to 62 points, the Midwest increased to 66 points and the West grew to 84 points.  

Although overall sentiment weakened this month, NAHB Chairman Greg Ugalde said construction growth is likely to come in the months to come.

Low-interest rates and a healthy labor market combined with a need for additional inventory is setting the stage for further home building gains in 2020,” Ugalde said.

 NOTE: The NAHB/Wells Fargo Housing Market Index gauges builder opinions of single-family home sales and expectations, asking for a rating of good, fair or poor. Builders are also asked to rate prospective buyer traffic from very low to very high. The scores are used to calculate a seasonally adjusted index with a rating of 50 or over indicating positive sentiment.

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