According to the National Association of Home Builders’ Housing Market Index, home builders witnessed a substantial boost in homebuilder confidence after President-elect Donald Trump won the election in November. Although builder sentiment has remained steady within the past couple of months, this seven-point spike in confidence has mortgage experts particularly eager for what’s to come in the housing market next year.
“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,” reported Ed Brady, Chairman of NAHB. “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.”
Robert Dietz, Chief Economist of NAHB, built on Brady’s positive outlook for next year’s housing market, explaining that “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.” More specifically, consumer confidence has steadily risen and the stock market has shown great gains—both important stimulants for a healthy housing market.
In addition, all three components of the HMI increased this month. According to the NAHB’s monthly survey to gauge builder perceptions of current and future single-family home sales, the “current sales” component increased seven points, while the “sales expectations” component increased nine points and the “buyer traffic” component increases six points. This is the first time the HMI’s “buyer traffic” component has risen above 50 since 2005!
With this month’s surge in HMI components and rising homebuilder sentiment, we look forward to more growth in the housing market next year. For more information about the housing industry, or to learn more about home financing, contact one of our mortgage specialists today.
