Builder Confidence Remains High in January
Despite Slight Dip in Housing Market Index
After recording a significant six-point gain in December, the Housing Market Index slipped two points in January to a level of 67. Despite the drop, the confidence level of single-family homebuilders remains on "firm ground," the National Association of Home Builders said.
Initially, December's HMI rose seven points to 70, compared to November, the index's highest level since July 2005. But the December HMI was later revised downward to 69.
January's reading is "consistent with a modest strengthening in homebuilding," according to Mark Vitner, senior economist for the Wells Fargo Economics Group.
"Builders begin the year optimistic that a new Congress and administration will help create a better business climate for small businesses, particularly as it relates to streamlining and reforming the regulatory process," said Granger MacDonald, chairman of the NAHB and a homebuilder in Texas.
"The NAHB expects solid 10 percent growth in single-family construction in 2017, adding to the gains of 2016," said Robert Dietz, chief economist for the association.
Each HMI is derived from surveys of homebuilders, who are asked to rate current single-family home sales and sales expectations for the next six months. Builders are also asked to rate the traffic of prospective buyers. Scores for each component are then used to calculate a seasonally adjusted index, and numbers above 50 mean more builders view conditions as good than poor.
Looking at the three-month moving averages for regional HMI scores, the Northeast rose two points to 52, the Midwest gained three points to 64, and the South and West each held steady at 67 and 79, respectively, the NAHB said.