Builder Confidence Holds 20-Year High, Despite January Dip
Following January's slight dip in newly built single-family home builders' confidence, economists are optimistic about future home building gains given the latest readings are at their highest in 20 years. Builder confidence readings in December and January were last seen in July 1999, the latter's score inching one point lower to 75.
According to the National Home Builders Association (NAHB), the data was retrieved from the NAHB/Wells Fargo Housing Market Index (HMI), which ranks single-family home sales and expected sales as "good," "fair" or "poor" six months into the future. In addition to rating traffic of prospective buyers as "high to very high," "average" or "low to very low," a score is calculated—any score over 50 suggesting higher builder confidence.
"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," NAHB Chief Economist Robert Dietz said in a report. "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."
The results for January showed a three-point drop in current sales conditions (81), while maintaining December's score (79) in regards to sales expectations in six months. The prospective buyers score rose one point to 58. Scores in the Northeast, Midwest and West all increased with scores in the low-60s, mid-60s and mid-80s, respectively. However, the South maintained its score in the mid-70s.
—Andrew Michaels, editorial associate