Homebuilder confidence eases from record, remains robust

Homebuilder confidence eased slightly in December to the second-best level on record following the prior month’s peak, signaling that low mortgage rates are still giving the industry a major boost.

A gauge of builder sentiment slipped to 86 from November’s reading of 90 that was the highest in records back to 1985, according to the National Association of Home Builders/Wells Fargo Housing Market Index released Wednesday. The figure was below the median forecast of 88 in Bloomberg’s survey of economists.

Even so, it’s an upbeat reading that indicates housing remains a bright spot for the economy, though strong demand for larger homes, rising materials costs and worker shortages are lifting prices beyond what some prospective buyers are willing to pay.

“Demand is strong entering 2021,” Chuck Fowke, chairman of NAHB, said in a statement. “However, the coming year will see housing affordability challenges as inventory remains low and construction costs are rising.”

Ratings of current sales and those expected over the next six months both eased, while the gauge of prospective buyer traffic fell to a four-month low of 73. Confidence measures decreased across all four regions.