Builder confidence rises in November

by calculated risk November 18, 2024 10:00:00 AM

According to the National Association of Home Builders (NAHB), the Housing Market Index (HMI) rose from 43 to 46 last month. Numbers below 50 indicate that more builders view the sales situation as worse than good.

From NAHB:
As election uncertainty eases, builder confidence has increased.

Builder sentiment has improved for the third straight month, and builders expect market conditions to continue to improve with Republicans taking control of the White House and Congress.

Builder confidence in the newly built single-family home market rose three points from October to 46 in November, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released today.

“With the election now in the rearview mirror, builders are growing increasingly confident that if Republicans take full power in Washington, it will lead to significant deregulation of the industry, leading to more homes and apartments being built,” the NAHB president said. “This reflects a significant increase in builder sales expectations over the next six months,” said Carl Harris, a custom home builder from Wichita, Kansas.

“Although construction confidence is improving, the industry still faces many headwinds, including labor shortages, lack of buildable land, and rising building material prices,” said Robert Dietz, NAHB chief economist. “Furthermore, while the stock market welcomes the election results, the bond market is expressing concerns about rising long-term interest rates. “As the power of the administration changes, policy uncertainty also exists in front of the business sector and the housing market,” he said.

A recent HMI survey found that 31% of builders reduced their home prices in November. This share has remained essentially unchanged since July, hovering between 31% and 33%. Meanwhile, the average price decline was 5%, slightly lower than last October’s 6%. Sales incentive usage was 60% in November, down slightly from 62% in October.
…
All three HMI subindexes rose in November. An index measuring current sales rose 2 points to 49, an index measuring sales expectations over the next six months rose 7 points to 64, and a gauge chart measuring traffic from potential buyers rose 3 points to 32. .

Looking at the three-month rolling averages of regional HMI scores, the Northeast rose four points to 55, the Midwest rose three points to 44, the South rose one point to 42, and the West remained flat at 41.

Emphasis added

Click on the graph to see a larger image.

This graph shows the NAHB index since January 1985.

This exceeded consensus predictions.