Builder Confidence High As 2019 Comes to a Close

Homebuilders are optimistic as we head into the new decade.

Shutterstock/ Irina Mos

The National Association of Home Builders released the final NAHB/Wells Fargo Housing Market Index of the year on Tuesday, and the numbers indicate that at least in terms of builder confidence the homebuilding industry is ending 2019 on a high note.

Builder confidence in the market for newly-built single-family homes jumped to 76 from November to December. The monthly HMI asks homebuilders to rate their perception of the market, with any score over 50 indicating that there are more builders who view conditions as good than there are who think conditions are poor. December’s score of 76 is the highest reading on the HMI since June of 1999.

“While we are seeing near-term positive market conditions with a 50-year low for the unemployment rate and increased wage growth, we are still under-building due to supply-side constraints like labor and land availability,” said NAHB chief economist Robert Dietz. “Higher development costs are hurting affordability and dampening more robust construction growth.”

Reports of these high levels of builder confidence were followed closely by new data released by the U.S. Housing and Urban Development and Commerce Department on Wednesday which shows that single-family home starts increased 2.4 percent in November.

“Market conditions for single-family starts are positive, given a lack of resale inventory, low interest rates and a solid job market,” said Greg Ugalde, NAHB chairman. “Builder confidence points to additional gains as we look forward.”

Overall permits, a good indicator of the rate of housing production in the future, also increased 1.4 percent. Taken as a whole, the homebuilding industry seems to have rebounded from its slump earlier this year and heads into the new decade on an optimistic note.