According to the National Association of Home Builders/Wells Fargo Housing Market Index, home builder sentiment had a 56 point reading in December 2018, the lowest level since May 2015.
The latest measure of builder confidence came after an 8-point decline in November 2018. Readings over the 50 point mark is considered positive sentiment. NAHB chairman and home builder Randy Noel tells CNBC, “We are hearing from builders that consumer demand exists, but that customers are hesitating to make a purchase because of rising home costs,” yet, Noel says that affordability may ease in the coming year, “Recent declines in mortgage interest rates should help move the market forward in early 2019.”
Association chief economist Robert Dietz adds, “This housing slowdown is an early indicator of economic softening, and it is important that builders manage supply-side costs to keep home prices competitive for buyers at different price points.”
Of the index’s three components, current sales conditions fell 6 points to 61, sales expectations in the next six months dropped 4 points to 61, and buyer traffic fell 2 points to 43.
Regionally, on a three-month moving average, builder sentiment in the Midwest dropped 2 points to 55; the West and South both fell 3 points to 68 and 65, respectively; and the Northeast plunged 8 points to 50.