The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) rose 3 points to 37 in December. This puts an end to a four-month decline in builder confidence, as recent economic data signal improving housing conditions heading into 2024.
“With mortgage rates down roughly 50 basis points over the past month, builders are reporting an uptick in traffic as some prospective buyers who previously felt priced out of the market are taking a second look,” said NAHB Chairman Alicia Huey, a custom home builder and developer from Birmingham, Ala. “With the nation facing a considerable housing shortage, boosting new home production is the best way to ease the affordability crisis, expand housing inventory and lower inflation.”
“The housing market appears to have passed peak mortgage rates for this cycle, and this should help to spur home buyer demand in the coming months, with the HMI component measuring future sales expectations up six points in December,” said NAHB Chief Economist Robert Dietz. Dietz added that the recent pessimism in builder confidence this fall has been somewhat counter to gains for the pace of single-family permits and starts during this time frame.
The HMI index gauging traffic of prospective buyers in December rose 3 points 24, the component measuring sales expectations in the next six months increased 6 points to 45 and the component charting current sales condition held steady at 40.
Looking at the three-month moving averages for regional HMI scores, the Northeast increased 2 points to 51, the Midwest fell 1 point to 34, the South dropped 3 points to 39 and the West posted a 4-point decline to 31.
Read the NAHB release.
