The National Association of Home Builders’ Housing Market Index rose by 7 points to hit 70, which is the highest level since 2005.
According to a number of reports, economists had forecast an unchanged reading of 63; levels higher than 50 signal confidence. In addition, mortgage rates have also hit a two-year high.
As the home builder confidence soared in December they attribute it to a “post-election bounce,” the group said in a statement. “Builders are hopeful that President-elect Trump will follow through on his pledge to cut burdensome regulations that are harming small businesses and housing affordability.”
Two other parts of the index’s sub-gauges gained in December:
The measure of current conditions grew by seven points to 76
Expectations for the upcoming six months increased by nine points to 78.
Both of these indexes came in at the highest levels since 2005.
Prospective Buyer Traffic
The traffic of prospective buyers rose six points to a reading of 53, with any level over 50 being a sign of improvement. What is noteworthy is that December’s reading was the first time the traffic index cracked the neutral 50 line since the bubble’s peak more than a decade ago.
According to the survey respondents, customers who turned out after the election believed the economy will improve. Concomitantly, the 30-year fixed-rate mortgage averaged 4.16% in the week ending December 15th, as reported by Freddie Mac.
The National Association of Home Builders have seen regulatory costs surging 29% in the past 5 years.
The Sentiment Index has averaged a reading of 61 in 2016. The last time that happened, in 2002, builders were breaking ground on an average 1.7 million homes.