Summary
The expectations from homebuilders for future sales climbed to a nearly three-year high in December, according to the National Association of Homebuilders. This bullish outlook kept the NAHB/Wells Fargo Housing Market Index at 46, unchanged from November. “While builders are expressing concerns that high interest rates, elevated construction costs, and a lack of buildable lots continue to act as headwinds, they are also anticipating future regulatory relief in the aftermath of the election,” said NAHB Chairman Carl Harris. Expectations for the next six months rose to 66 in December from 63 in November. A reading below 50 indicates that more builders see conditions as poor than good. The current conditions component of the index held steady at 48, while traffic from prospective buyers ticked down to 31. Traffic may be a useful indicator as the spring selling season approaches. While we believe it will take a decline in the 30-year mortgage rate to about 6% from the current 6.6% to stimulate a significant improvement in traffic, “consumers appear to be acclimating to higher mortgage rates and the home price environment,” according to Fannie Mae, whose Home Purchase Sentiment Index has risen by 10.7 points over the last year to 75.0 in November. The percentage of respondents who say it is a good time to buy a home increased last month, but sentiment remains very low at 23%. Two other findings from Fannie’s survey are that consumers expect their personal financial situation to improve over the next 12 months. They also expect the pace of home pric