The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) held steady at 46, the same as in November.
“While builders are expressing concerns that high interest rates, elevated construction costs and a lack of buildable lots continue to act as headwinds, they are also anticipating future regulatory relief in the aftermath of the election,” said NAHB Chairman Carl Harris, a custom home builder from Wichita, Kan. “This is reflected in the fact that future sales expectations have increased to a nearly three-year high.”
“NAHB is forecasting additional interest rate cuts from the Federal Reserve in 2025, but with inflation pressures still present, we have reduced that forecast from 100 basis points to 75 basis points for the federal funds rate,” said NAHB Chief Economist Robert Dietz. “Concerns over inflation risks in 2025 will keep long-term interest rates, like mortgage rates, near current levels with mortgage rates remaining above 6%.”
The survey also showed that 31% of builders cut home prices in December, unchanged from November, while the average price reduction was 5%, the same rate as in November. The Index charting current sales conditions in December held steady at 48, the component measuring sales expectations in the next six months increased three points to 66 and the gauge charting traffic of prospective buyers posted a one-point decline to 31.
Looking at the three-month moving averages for regional HMI scores, the Northeast increased two points to 57, the Midwest moved two points higher to 46, the South posted a two-point gain to 44 and the West fell one point to 40.
Read the NAHB release.
