Homebuilders continue to be confident about the prospects for the housing market, as measured by the National Association of Home Builders' Housing Market Index. The HMI score was 63 in November, the same as in October, and it remains well above the all-important benchmark level of 50.
The HMI is derived from a survey that asks builders to assess current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index, and any number over 50 indicates that more builders view conditions as good than poor.
"With most of our members responding before the November elections, confidence levels remained unchanged as they awaited the results," said Ed Brady, chairman of the NAHB. "Still, builder sentiment has held well above 60 for the past three months, indicating that the single-family housing sector continues to show slow, gradual growth."
At 63, the HMI also remains at the second-highest level of 2016.
On a regional basis, the Northeast, Midwest and West each posted respective two-point gains to 45, 58 and 77. The South remained unchanged at 66.
Home Purchase Sentiment Index Drops in October
Fannie Mae's Home Purchase Sentiment Index fell in October for the third straight month, dropping 1.1 points to 81.7, as four of its six components all decreased. The HPSI shed 1.1 percentage points in September and is off 1.5 percentage points from a year ago.
The HPSI, a gauge for consumer sentiment and attitudes toward housing, is now at its lowest level since March.
The share of consumers reporting significantly higher income over the past year fell eight percentage points. The share of consumers expecting home prices to go up in the next year dropped three percentage points. Those who expect mortgage rates to drop and those who are confident about not losing their job each dropped by one percentage point. The only upside was a question asking consumers if they believe now is a good time to buy and a good time to sell a home, increasing two and four points, respectively.
"Recent erosion in sentiment likely reflects, in part, enhanced uncertainty facing consumers today," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "Since July, more consumers, on net, have steadily expected mortgage rates to rise and home price appreciation to moderate.
"Furthermore, consumers' perception of their income over the past year deteriorated sharply in October to the worst showing since early 2013, weighing on the index," Duncan said. "However, this component of the HPSI is volatile from month to month, and the firming trend in wage gains from the October jobs report, if sustained, may foreshadow an improving view in the near future."