As we close out the year, builder sentiment remains stable despite the challenges of high home prices and mortgage rates. However, there’s renewed optimism for a better regulatory environment in 2025! Builders are feeling more hopeful about increasing sales in the coming months. 📈✨
According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), builder confidence in the market for newly built single-family homes is at 46 for December, the same as last month.
NAHB Chairman Carl Harris, a custom home builder from Wichita, Kan., shared, “While builders are worried about high interest rates, rising construction costs, and a shortage of buildable lots, they anticipate regulatory relief following the election. This is evident as future sales expectations have soared to a nearly three-year high!” 🚀
The NAHB predicts some interest rate cuts from the Federal Reserve in 2025, but due to ongoing inflation concerns, they’ve adjusted their forecast slightly from 100 basis points to 75 basis points for the federal funds rate. This means mortgage rates are likely to stay above 6% for a while. 📊💰
In December, 31% of builders cut home prices, consistent with November, and the average price reduction was 5%. Sales incentives remained steady at 60%.
The HMI is based on a monthly survey that has been running for over 35 years, gauging builder perceptions of current home sales and expectations for the next six months. 🏘️👍 Scores over 50 indicate that more builders see conditions as good rather than poor.
In terms of current sales conditions, the index held steady at 48, while traffic from prospective buyers dropped slightly to 31. However, sales expectations for the next six months jumped to 66, the highest since April 2022! 📅🚀
Looking at regional scores, the Northeast increased to 57, the Midwest rose to 46, the South gained to 44, and the West saw a slight decrease to 40.
For more details on the HMI tables, check out nahb.org/hmi. 🖱️ And if you’re interested in housing statistics, be sure to visit Housing Economics PLUS! 📊
Let’s keep the conversation going! What are your thoughts on the housing market? 🏡💬
