US Homebuilder Confidence Soars to 8-year High in December: NAHB
US homebuilder sentiment toward the newly built, single-family housing market soared in December to the highest level since 2005, according to the National Association of Home Builders.
The NAHB Housing Market Index rose four points to 58 in December, exceeding forecasts. A reading above 50.0 signals confidence in the housing market.
Confidence rose as a result of higher sales expectations and growing buyer traffic, which indicate the recent slowdown in home buying is only temporary. Rising mortgage rates have deterred would-be buyers from entering the market for new and previously-owned homes, a trend many fear could weigh down US recovery.
Sentiment was positive in three of the four regions, including the Midwest, West and South. Sentiment in the North East remained below the confidence threshold.
“The recent spike in mortgage interest rates has not deterred consumers as rates are still near historically low levels,” said Rick Judson of NAHB. The Housing Market Index “is up 11 points since December 2012 and has been above 50 for the past seven months. This indicates that an increasing number of builders have a positive view of where the industry is going.”
The confidence index rose after two months of stagnation, which was due in large part to fiscal uncertainty emanating from the federal budget impasse. The surge in December is a reflection of “pent-up demand,” according to NAHB chief economist David Crow.
The NAHB’s index of future sales expectations rose to a three-month high, a sign homebuilders expect the market to gain even more traction in 2014. As labour market prospects continue to brighten, residential real estate could experience sustained growth throughout 2014.
The Mortgage Bankers’ Association will report on mortgage applications Wednesday, followed by government data on housing starts and previously-owned home sales. Thursday’s report is expected to show the sale of previously-owned homes declined 1.5 percent in November, according to a median estimate of economists.
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