The Decker Group Home Builder Sentiment Jumps to Highest Level Since 2005

Home builder sentiment gets a post-election boost, with levels reaching their highest point since 2005.

A monthly reading of home builder confidence by the National Association of Home Builders (NAHB) spiked 7 points in December, its first measure done after the presidential election.

The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) rose to 70, the highest level since July 2005. Any reading of 50 or higher signifies that more builders have positive sentiment toward the market. The index has not seen a monthly increase this high in 20 years. The index stood at 60 one year ago.

This notable rise in builder sentiment has been largely attributed to a post-election bounce, as builders appear hopeful that President-elect Donald Trump will follow through on his pledge to cut burdensome regulations that are harming small businesses and housing affordability, said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Illinois.

“This is particularly important, given that a recent NAHB study shows that regulatory costs for homebuilding have increased 29 percent in the past five years,” added Brady, whose name has come up as a possible head of the Federal Housing Administration in the Trump administration.

Of the index’s three components, current sales conditions increased 7 points to 76, sales expectations in the next six months rose 9 points to 78 and buyer traffic rose 6 points to 53. This is the first-time buyer traffic has been in the positive since October 2005.

This Week’s Mortgage Rate Summary

Rates Currently Trending: Lower

Mortgage rates were trending slightly lower the morning of December 19, after the MBS market worsened -88 bps.

This Week’s Forecast: Neutral

Depending on what news we’re in for this week regarding the Central Bank (as well as a few other key economic data releases), rates are likely to remain neutral for this week and probably won’t exhibit any major changes.