Builder Confidence Holds Firm in January

January 18, 2017

Builder confidence in the market for newly-built single-family homes remained on firm ground in January, down two points to a level of 67 from a downwardly revised December reading of 69 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

“Builders begin the year optimistic that a new Congress and administration will help create a better business climate for small businesses, particularly as it relates to streamlining and reforming the regulatory process,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas.

“NAHB expects solid 10 percent growth in single-family construction in 2017, adding to the gains of 2016,” said NAHB Chief Economist Robert Dietz. “Concerns going into the year include rising mortgage interest rates as well as a lack of lots and access to labor.”

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three HMI components retreated in January. The component gauging current sales conditions fell three points to 72, the index charting sales expectations in the next six months registered a two-point decline to 76 and  the component measuring buyer traffic edged one-point lower to 51.

Looking at the three-month moving averages for regional HMI scores, the Northeast rose two points to 52 and the Midwest posted a three-point gain to 64. The South and West each held steady at 67 and 79, respectively.

Editor's Note: The NAHB/Wells Fargo Housing Market Index is strictly the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public. HMI tables can be found at nahb.org/hmi. More information on housing statistics is also available at housingeconomics.com.