Homebuilders across the country are optimistic, with confidence jumping unexpectedly in December on expectations for a stronger economy.
According to a CNBC report, monthly reading of homebuilder sentiment rose 5 points to 74. This is the highest reading since 1999.Fifty is the line between positive and negative sentiment on the National Association of Home Builders’ index. November’s reading was revised lower by 1 point.
Sentiment stood at 69 in December 2016. NAHB Chairman Granger MacDonald, a homebuilder and developer from Kerrville, Texas, offered his perspective.
“Housing market conditions are improving partially because of new policies aimed at providing regulatory relief to the business community.”
Homebuilders had been vocal opponents to the Republican tax plan, which was approved by Congress. They believe that changes to both the mortgage interest deduction and property tax deductions were seen as removing some of the benefits of homeownership. Apparently, builders now see the business incentives in the plan as outweighing those other negatives.
Of the index’s three components, buyer traffic jumped 8 points to 58. Current sales conditions rose 4 points to 81. Sales expectations in the next six months increased 3 points to 79.
NAHB Chief Economist Robert Dietz said there are several factors, buyer traffic on the rise amid a severe shortage of existing homes for sale.
“With low unemployment rates, favorable demographics and a tight supply of existing home inventory, we can expect continued upward movement of the single-family construction sector next year.”
Regionally, on three-month moving averages, builder sentiment in the Midwest increased 6 points to 69, in the South it rose 3 points to 72. In the West sentiment increased 2 points to 79 and in the Northeast it rose 1 point to 54.