Home Builder Confidence Rises this Month

Despite the on-going trade war with China and the rising costs of goods, according to the National Association of Home Builders, home builder confidence increased.  Home builder confidence rose to 68, up from a recently revised confidence score last month of 67.  While the increase may seem small, this is a rating we haven’t seen since last year.  Any rating over 50 shows that builders’ confidence is improving.

Home builder confidence has slowly increased since the beginning of the year.  At a paltry 58 in January, up from 56 the month before, it seemed it had peaked in May at a rating of 66.  It fell at the beginning of summer but worked its way back up.  The confidence rating is a survey that asks the National Association of Home Builders members to rate their current market conditions and 6 months down the road.  They also account for the number of potential home buyers that go through their current projects.  The responses are then weighted and seasonally adjusted.

This increase in confidence is due to builder optimism.  With current rates still at an all-time low, builders believe many home buyers will take advantage.  The Federal Reserve is meeting this week to discuss a possible rate cut, which would bring rates lower.  There are many home buyers out there, most notably in the Northeast and South, where most of the confidence improved.

However, the increasing costs of building due to the tariffs from the US-China trade war is hurting the start of new projects.  The number of new permits for housing decreased in the summer months.  One economist said home builders don’t want to break ground on new projects if they believe the economy will falter later, which is helping fuel the current recession rumors. 

As we near the end of the year, the market will soften as expected.  We will continue to see less homes available on the market and consumer demand to quiet down for the holidays.