The National Association of Home Builders/Wells Fargo Housing Market Index decreased to 86 in December. This is the first month of decline after three consecutive record-breaking months. Despite the decline, this is still the second-highest reading in the history of the series
NAHB Chairman Chuck Fowke noted that housing will continue strong into 2021, however, affordability will continue to be an issue as inventory remains low and construction costs are rising.
“Builder confidence fell back from historic levels in December, as housing remains a bright spot for a recovering economy,” said NAHB Chief Economist Robert Dietz. “The issues that have limited housing supply in recent years, including land and material availability and a persistent skilled labor shortage, will continue to place upward pressure on construction costs. As the economy improves with the deployment of a COVID-19 vaccine, interest rates will increase in 2021, further challenging housing affordability in the face of strong demand for single-family homes.”
The HMI component measuring buyer traffic decreased four points to 74. The component measuring current sales conditions fell four points to 92, and the component measuring sales expectations in the next six months declined four points to 85.
The three-month moving averages for regional HMI scores, the Northeast fell one point to 82, the Midwest was up one point to 81, the South rose one point to 87 and the West increased two points to 96.