Highest Since 1999
The National Association of Home Builders’ index climbed dramatically in December reflecting a robust expectation for a stronger economy moving into 2018. The monthly homebuilder index rose five points to 74, with 50 being the threshold point determining whether builders are positive or negative. This is the highest reading since 1999. This report reflects an approximate jump of nearly 9% since December 2016, when builder sentiment was measured at just 69.
This seems to reflect a shift in builders’ opinion of the new tax plan proposed, seeing more incentives in the plan than negatives. Initially, the homebuilders had opposed the Republican tax plan, which will make significant changes to both the mortgage interest deduction and property tax deductions. What appeared to be the turning point in builder sentiment were three elements that go into the index: buyer traffic, sales conditions, and sales expectations. Buyer traffic jumped eight points to 58; current sales conditions rose four points to 81; and sales expectations in the next six months increased three points to 79.