The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) fell one point to 70 in November 2019. This slight fall comes after the HMI began rising in June 2019 to its highest level of the year in October 2019.
Three components make up this Home Market Index every month:
- Current sales conditions – fell 2 points to 76
- Consumer traffic – fell one point to 53
- Sales expectations for next 6 months – rose one point to 77.
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Remember that any point count above 50 pertaining to this HMI is considered to be positive. For comparison, the HMI in November 2018 was 60 rather than the much more positive point score of 70 in November 2019.
Homebuilder sentiment also came in at a high note. In the Northeast, homebuilder sentiment rose two points to 62; homebuilder sentiment in the West rose three points to 81; homebuilder sentiment in the Midwest remained unchanged from October to November and homebuilder sentiment in the South rose one point to 74 in November 2019.
Single family builders are currently reporting ongoing positive conditions, spurred in part by low mortgage rates and continued job growth,” said NAHB chair Greg Ugalde, “In a further sign of solid demand, this is the fourth consecutive month where at least half the builders surveyed have reported positive buyer traffic.”
Another positive sign from homebuilders is the beginnings of a pivot towards less pricing starter homes. Starter homes represent the strongest demand from consumers and starter homes have taken the biggest hit inventory-wise…anything to beef up that low-tier supply is more than welcome.
According to Robert Dietz, chief economist with the NAHB, “We have seen substantial y/y improvement following the housing affordability crunch of late 2018 when the HMI stood at 60. However, lot shortages remain a serious problem, particularly among custom builders. Builders will continue to grapple with other affordability headwinds, including a lack of labor and regulatory constraints.”