Homebuilder confidence was flat in December from the previous month and came in lower than analyst estimates due to uncertainty about how quickly mortgage rates will fall.
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index remained at 46 in December, lower than economists’ estimates of 47, according to Bloomberg data.
Any value below 50 indicates that more builders view conditions as poor rather than good.
“While builders express concerns that high interest rates, higher construction costs and a lack of buildable lots continue to be headwinds, they also anticipate future regulatory relief in the wake of the election,” said NAHB Chairman Carl Harris, a custom home builder. of Wichita, Kansas, said in a press statement: “This is reflected in the fact that future sales expectations have risen to the highest level in almost three years.”
Mortgage rates have fallen for the past three weeks in a row, with the average 30-year mortgage rate at 6.6%, according to Freddie Mac.
There are growing expectations that the Federal Reserve will cut the fed funds rate by 25 basis points by the end of Wednesday’s meeting. The drop has already been reflected in current mortgage interest rates, so housing experts do not expect mortgage rates to fall further.
NAHB chief economist Robert Dietz writes: “Concerns about inflation risk in 2025 will keep long-term interest rates, like mortgage rates, near current levels, while mortgage rates remain above 6%.”
