Builder confidence in the market for newly-built single-family homes reached its highest level since June 1999, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI).
The Index rose five points to 76 in December off an upwardly revised November reading. All three HMI components were on the rise this month: The HMI index gauging current sales conditions rose seven points to 84, the component measuring sales expectations in the next six months inched up one point to 79 and the measure charting traffic of prospective buyers took a four-point jump to 58. Looking at the three-month moving averages for regional HMI scores, the Midwest increased five points to 63, the South moved one point higher to 76 and the West rose three points to 84, while the Northeast went in the opposite direction and fell two points to 61.
“Builders are continuing to see the housing rebound that began in the spring, supported by a low supply of existing homes, low mortgage rates and a strong labor market,” said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn.
NAHB Chief Economist Robert Dietz said: “While we are seeing near-term positive market conditions with a 50-year low for the unemployment rate and increased wage growth, we are still underbuilding due to supply-side constraints like labor and land availability. Higher development costs are hurting affordability and dampening more robust construction growth.”