Homebuilder Confidence Rises to Highest Since June 2005
Confidence among U.S. homebuilders is the strongest since the mid-2000s housing boom as sales prospects improve despite rising mortgage rates, according to data March 15 from the National Association of Home Builders/Wells Fargo.
Key Points
• Builder sentiment gauge rose to 71 in March, the highest since June 2005, from an unrevised 65 in February.
• Median forecast in a Bloomberg News survey was for 65; readings greater than 50 indicate more respondents reported good market conditions.
• Measure of six-month sales outlook increased to 78 from 73, matching the highest since 2005; index of current sales climbed 7 points to 78, the highest since December 2004.
• Prospective buyer traffic gauge rose to 54 from 46.
Big Picture
The NAHB index has jumped since President Trump’s election victory, as optimism for his plans to cut regulations and boost growth blunted the typical cooling effect of rising interest rates. While the 30-year fixed mortgage rate is at a 10-week high, borrowing costs still are low by historical standards, and the economy and labor market continue to grow at a steady pace.
The group said developers also were buoyed by Trump’s February directive to rescind an Obama-era environmental rule affecting building permits.
Economist Takeaways
“While builders are clearly confident, we expect some moderation in the index moving forward,” NAHB Chief Economist Robert Dietz said in a statement. “Builders continue to face a number of challenges, including rising material prices, higher mortgage rates, and shortages of lots and labor.”
The Details
• Confidence in the Midwest rose 9 points to 73, a record in data going back to 2004; regional indexes also rose in the Northeast and South.
• Sentiment was little changed in the West at 77 after 76.
