Builder confidence for newly built single-family homes is at its lowest level in more than three years. The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) dipped four points to 56 in December, the lowest reading since May 2015; however, confidence is still in positive territory.
One of the contributing factors to the December decline was rising home costs. "We are hearing from builders that consumer demand exists, but that customers are hesitating to make a purchase because of rising home costs," said NAHB Chairman Randy Noel in a release. "However, recent declines in mortgage interest rates should help move the market forward in early 2019."
Current sales, six-month expectations and buyer traffic indices also dropped this month. Current sales and expectations fell six points and four points, respectively, to 61. Buyer traffic slipped deeper into poorer conditions, dropping two points to 43.
"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," added NAHB Chief Economist Robert Dietz.
All four three-month moving regional averages saw a decline. The Midwest stepped back two points to 55, while the West and South both dropped three points, staying in the 60s. The Northeast was hit the hardest with an eight-point spill to 50.
-Michael Miller, managing editor