Sentiment dropped 4 points to 86 in December, according to the latest NAHB/Wells Fargo Housing Market Index. That is now the second-highest reading in the history of the index, which dates to 1985. Anything above 50 is considered positive. Last December, the index stood at 76. Housing demand is strong entering 2021, however the coming year will see housing affordability challenges as inventory remains low and construction costs are rising, said NAHB Chairman Chuck Fowke, a builder from Tampa, Florida.
Of the index s three components, current sales conditions dropped 4 points to 92. Sales expectations in the next six months fell 4 points to 85. Buyer traffic also decreased 4 points to 73.
Builder Confidence Pulls Back from Record Levels Dec 16 2020, 10:29AM
After setting successive survey highs in September, October, and November,
the National Association of Home Builders (NAHB)/Wells Fargo Housing Market
Index (HMI) retreated a bit this month. The HMI, which is a measure of home
builder confidence in the new home market, fell 4 points to 86. Despite this
decline, it was still the second highest reading in the HMI s 35-year history.
Only the November 2020 reading of 90 was higher.
NAHB economist Robert Dietz said, Housing demand is strong entering 2021,
however the coming year will see housing affordability challenges as inventory
remains low and construction costs are rising.