The nation’s low-interest rates and strong job market weren’t enough to maintain homebuilder confidence in November as the National Association of Home Builders and Wells Fargo said sentiment fell 1 point to 70 points in this month’s Housing Market Index.
Despite the decline, the November reading now marks the second-highest level in 2019 and is 10 points above the year-ago month.
“Single-family builders are currently reporting ongoing positive conditions, spurred in part by low mortgage rates and continued job growth,” NAHB Chairman Greg Ugalde said. “In a further sign of solid demand, this is the fourth consecutive month where at least half of all builders surveyed have reported positive buyer traffic conditions.”
The index measuring current sales conditions fell to 76 points, while buyer traffic slid to 53 points and sales expectations over the next six months rose to 77.
The three-month moving averages for regional HMI scores show the Northeast increased to 62 points, the South grew to 74 points, the West climbed to 81 points and the Midwest held steady at 58 points.
Although all regions improved during the month, NAHB Chief Economist Robert Dietz notes homebuilders across the country continue to struggle with affordability.
“We have seen substantial year-over-year improvement following the housing affordability crunch of late 2018, when the HMI stood at 60,” said Dietz. “However, lot shortages remain a serious problem, particularly among custom builders. Builders also continue to grapple with other affordability headwinds, including a lack of labor and regulatory constraints.”
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.