Mortgage rates continue to put downward pressure on builder confidence, according to the latest data from the National Association of Home Builders /Wells Fargo Housing Market Index.
- M-O-M: Builder confidence in the market for newly built single-family homes in November fell to 34 in November, down 6 points from October and the lowest level since last December.
- Y-O-Y: Builder confidence is actually up 3 points from last year.
Swing & A Miss. Economists were projecting that the confidence index would hold at 41.
Bad Across The Board. All three major components of the index fell in November. The index gauging current sales conditions fell 6 points to 40, the component charting sales expectations in the next six months dropped 5 points to 39 and the gauge measuring traffic of prospective buyers dipped 5 points to 21.
All Regions In The Red. The four regions are now all in the red after each region saw a dip in Novemeber. The Northeast held on to the top spot with just a 1 point slide to 49 in Novemeber.
- The South saw the biggest drop of the month with a 7 point drop to 42 followed by the Midwest falling 3 points to 36, and the West pulling up the read after a 6 point declined to 35.
Analysis. Robert Dietz, NAHB Chief Economist, was quite optimistic despite the grim report. “While builder sentiment was down again in November, recent macroeconomic data point to improving conditions for home construction in the coming months. In particular, the 10-year Treasury rate moved back to the 4.5% range for the first time since late September, which will help bring mortgage rates close to or below 7.5%. Given the lack of existing home inventory, somewhat lower mortgage rates will price-in housing demand and likely set the stage for improved builder views of market conditions in December.”