Builder confidence stagnant as optimism grows

Home builder confidence was stagnant this month even as confidence grows for 2025 following the Nov. 5 election, according to the National Association of Home Builders/Wells Fargo Housing Market Index..The index was 46 this month, unchanged from November. Any reading above 50 shows the single-family housing market is in good shape. Thirty-one percent of builders reduced home prices this month, unchanged from November, while the average price reduction — 5 percent — was also unchanged. .The index tracking current sales conditions remained at 48 in December, while the component tracking sales expectations for the next six months increased three points to 66. The gauge measuring traffic of prospective buyers fell one point to 31. ."While builders are expressing concerns that high interest rates, elevated construction costs and a lack of buildable lots continue to act as headwinds, they are also anticipating future regulatory relief in the aftermath of the election," said NAHB Chair Carl Harris. "This is reflected in the fact that future sales expectations have increased to a nearly three-year high.".The NAHB is reducing its forecast for additional interest rate cuts next year to 75 basis points from 100 basis points. The Federal Open Market Committee cut interest rates 0.25 percent on Dec. 18, but the odds of another reduction next month are in doubt as inflation remains stubbornly above the FOMC's long-term target of 2 percent. ."Concerns over inflation risks in 2025 will keep long-term interest rates, like mortgage rates, near current levels with mortgage rates remaining above 6 percent," said NAHB Chief Economist Robert Dietz. .Housing numbers increased in November, according to the U.S. Census Bureau and U.S. Department of Housing and Urban Development. Privately-owned housing units greenlighted by building permits increased 6.1 percent in November to 1.5 million from 1.41 million in October, but were still slightly under the November 2023 rate. Single-family authorizations increased slightly to 972,000 from 971,000 in October. .Other report findings included: .Privately-owned housing starts fell 1.8 percent to 1.289 million from 1.312 million, and were 14.6 percent under the November 2023 rate of 1.510 million. Single-family housing starts increased 6.4 percent to 1.011 million from 950,000 in October. Privately-owned housing completions fell nearly 2 percent to 1.60 million from 1.63 million in October. Single-family housing completions increased 3.3 percent to 1.038 million from 1.005 million in October.