US Builder Confidence Moves Higher on Lower Mortgage Interest Rates in December

On Monday (12-18-23), the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) showed that builder sentiment in the market for newly built single-family homes increased 3 points to a reading of 37 in December. The growth brings a string of four consecutive monthly declines in the HMI to an end.

The NAHB notes that with mortgage rates down nearly 50 basis points over the past month, builders are reporting an uptick in traffic. The housing market appears to have passed peak mortgage rates for this cycle, and this should help to spur homebuyer demand in the coming months. The HMI component that measures future sales expectations was up 6 points in December.

In December, two out of three HMI components posted gains.

• The component gauging current sales conditions held steady at a reading of 40.
• The component that charts sales expectations in the next six months climbed 6 points to a reading of 45.
• The component that measures traffic of prospective buyers increased 3 points to a reading of 24.

Looking at the three-month moving averages for regional HMI scores, the Northeast increased 2 points to a reading of 51; the Midwest fell 1 point to a reading of 34; the South dropped 3 points to a reading of 39; and the West posted a 4-point decline to a reading of 31.