Nation's Building News Online

Builder Confidence Down Slightly This Month

Builder confidence in the market for new single-family homes dipped slightly this month after reaching its highest point in nearly four years during October as measured by NAHB’s Housing Market Index (HMI), a monthly gauge of builder sentiment. The index declined three points to 69 this month.

“After the really solid sales activity of this summer and early fall, builders remain in very good spirits heading toward the holidays,” said NAHB President Kent Conine. “However, we’re seeing some slowdown in visitors to model homes. That’s a typical observation builders are making.”

NAHB Chief Economist David Seiders added that all of the fundamentals — including mortgage rates in the 6% range, reviving consumer confidence and impressive house-price performance — suggest ongoing health for the nation’s housing industry.

“However, many fence-sitting home buyers went ahead and made their moves when rates were so good in October, so a moderate decline in the HMI is to be expected at this point,” Seiders said.

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The HMI is derived from a monthly survey of builders that NAHB has been conducting for nearly 20 years. Home builders are asked to rate current sales of single-family homes and sales expectations for the next six months and the traffic of prospective buyers. Any score over 50 indicates that more builders view sales conditions as good than poor.

All three components of the HMI dipped this month, but remained in a historically healthy range.

The index gauging current sales conditions declined one point to 77; and sales expectations for the next six months dropped three points to 79. The most significant decline occurred in the index gauging traffic of prospective buyers, which fell six points, to 46.

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