Courtesy of National Association of Homebuilders
December of 2019 registered the highest score for builder confidence since June of 1999, according to a monthly survey conducted by Wells Fargo and the National Association of Homebuilders (NAHB).
The Housing Market Index is based on builder survey data about current home sales, anticipated sales for the next six months, and the numbers of prospective buyers approaching the builders. An average of the three scores above 50 is considered positive, and December came in at 76. (Respective numbers in December were 84 for current sales, 79 for expected sales and 58 for prospective buyers.)
Growth Exceeds Expectations
The increase exceeded an already optimistic outlook by economists who had predicted a score of up to 70 in a Bloomberg survey. The numbers prompted Pantheon Macroeconomics Chief Economist Ian Shepherdson to call housing “the hottest part of the whole economy,” while predicting continued growth over the coming months.
Regionally, the index fell two points in the Northeast (down to 61—still a positive rating) but saw increases in the South (up to 76), West (up to 84), and Midwest (up to 63). (Related: Real Estate Markets to Watch in 2020 and Beyond)
Positive economic trends like good employment rates and increasing wages help drive optimism. NAHB Chief Economist Robert Dietz noted that short supplies of labor and land, though, are offsetting growth, keeping prices high and supplies low.