Home Builder Confidence Soars to an 11 Year High

Home builders saw a boost in confidence in home building, not seen since 2005 according to the National Association of Home Builders/Wells Fargo Housing Market Index.  The increase brought the index level to a 70 which is a 7 point increase from the 63 measured for November.  A number over 50 indicates more builders view conditions as good than poor.  Regionally in the Northeast the Index indicates a 12 point increase from November showing a rate higher than the national average.  This is a good indication that sales and development of homes will increase as well as there be a growing need for property management services here in NYC.

The index is used by economists to track the inclination among home builders on whether they will start new home constructions.  The economic outlook would be bright as new projects would lead to new hires and more spending in the construction industry.  NAHB Chairman, who himself is a developer from Illinois says that there is a direct correlation between the election and the index.  He states  “This notable rise in builder sentiment is largely attributable to a post-election bounce, as builders are hopeful that President-elect Trump will follow through on his pledge to cut burdensome regulations that are harming small businesses and housing affordability.  This is particularly important, given that a recent NAHB study shows that regulatory costs for home building have increased 29% in the past five years.”

Sales of new, single-family homes are on pace to reach the highest level this year since the recession began in 2007. Chief Economist for NAHB Robert Dietz believes that the overall picture is looking positive.  “Though this significant increase in builder confidence could be considered an outlier, the fact remains that the economic fundamentals continue to look good for housing” he says.

There is one recent event that may limit homeowner's  ability to afford homes and that is the Federal Reserve's announcement to raise interest rates.  The assumption is by raising the central bank's  rate it would put pressure on the banks to increase mortgage rates.  There is also a  presumption that the Fed may increase rates a few more times in 2017.

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