Builder confidence in the market for newly built single-family homes dipped one point lower to 75 in January, according to the latest NAHB/Wells Fargo Housing Market Index (HMI). However, the National Association of Home Builders said the December and January readings were the highest sentiment levels since July 1999.
Meanwhile, the U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau reported that housing starts in December reached a 13-year high.
“Low interest rates and a healthy labor market, combined with a need for additional inventory, are setting the stage for further home building gains in 2020,” NAHB Chairman Greg Ugalde said in a release.
The HMI index charting traffic of prospective buyers in January increased one point to 58, the highest level since December 2017. The gauge measuring current sales conditions fell three points to 81, and the component measuring sales expectations in the next six months held steady at 79.
“With the Federal Reserve on pause and attractive mortgage rates, the steady rise in single-family construction that began last spring will continue into 2020,” NAHB Chief Economist Robert Dietz said. “However, builders continue to grapple with a shortage of lots and labor, while buyers are frustrated by a lack of inventory, particularly among starter homes.”
The index also found the three-month moving averages for regional HMI scores in January rose one point to 62 in the Northeast; three points to 66 in the Midwest; moved one point higher to 84 in the West; and remained unchanged at 76 in the South.
During December, privately owned housing starts were at a seasonally adjusted annual rate of 1.608 million, nearly 17 percent above the revised November estimate of 1.375 million and 40.8 percent above the December 2018 rate of 1.142 million, the federal government reported.