Builders’ confidence in the market for new single-family homes fell as the National Association of Home Builders' housing market index dropped to 56 in December from 60 in November.
The last time the index was this low was May 2015, when the index was 54.
IFR's poll of economists predicted the index would be 60.
“We are hearing from builders that consumer demand exists, but that customers are hesitating to make a purchase because of rising home costs,” NAHB Chairman Randy Noel said. “However, recent declines in mortgage interest rates should help move the market forward in early 2019.”
“The fact that builder confidence dropped significantly in areas of the country with high home prices shows how the growing housing affordability crisis is hurting the market,” according to NAHB Chief Economist Robert Dietz. “This housing slowdown is an early indicator of economic softening, and it is important that builders manage supply-side costs to keep home prices competitive for buyers at different price points.”
Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as either "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as either "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.
The current single-family home sales index declined to 61 from 67, the sales expectations index for the next six months fell to 61 from 65; and the traffic of prospective buyers index slipped to 43 from 45.
