Confidence Among Homebuilders in U.S. Surges to an 11-Year High

Confidence among U.S. homebuilders surged in December to an 11-year high on prospects the election of Donald Trump will translate into a smaller regulatory burden on the industry, according to data Thursday from the National Association of Home Builders/Wells Fargo.

Key Points

  • Builder sentiment gauge rose to 70 (forecast was 63), the highest since July 2005, from 63; readings below 50 mean more respondents report poor market conditions
  • Index of prospective buyer traffic rose to 53, also an 11-year high, from 47
  • Measure of six-month sales outlook jumped to 78, the best reading since June 2005, from 69
  • Gauge of current sales rose to an 11-year high of 76 from 69

Big Picture

The post-election bounce in sentiment among builders is consistent with other data showing American industries are optimistic Trump will make it easier for companies to do business. While homebuilders in all four U.S. regions were more upbeat, the backdrop for the industry includes rising mortgage rates and shortages of available lots and skilled workers.

Economist Takeaways

“Though this significant increase in builder confidence could be considered an outlier, the fact remains that the economic fundamentals continue to look good for housing,” NAHB Chief Economist Robert Dietz said in a statement. “The rise in the HMI is consistent with recent gains for the stock market and consumer confidence. At the same time, builders remain sensitive to rising mortgage rates and continue to deal with shortages of lots and labor.”

The Details

  • Builder confidence climbed the most in the Northeast, with the index rising to 59 in December from 47; sentiment rose to 86 from 76 in the West
  • NAHB index rose in December for the first time in three months
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