Builder sentiment rose three points to 36 in December; anything below 50 is considered negative for the National Association of Home Builders’ monthly survey, according to NAHB. It reached a record high of 90 in November 2020.
Two of the three components of the homebuilder index increased, with sales expectations in the next six months climbing six points to 45 and buyer traffic rising three points to 24. Current sales conditions held steady at 40.
Falling mortgage rates may continue to boost optimism during the coming months.
“With mortgage rates down roughly 50 basis points over the past month, builders are reporting an uptick in traffic as some prospective buyers who previously felt priced out of the market are taking a second look,” said NAHB Chairman Alicia Huey. “With the nation facing a considerable housing shortage, boosting new home production is the best way to ease the affordability crisis, expand housing inventory and lower inflation.”
Thirty-six percent of builders reported cutting prices in December, which is unchanged from November. The average price discount is holding at 6%. Additionally, 60% of builders provided sales incentives of all types in December, which is unchanged from November but down slightly from 62% in October.
