The National
Association of Homebuilders (NAHB) announced on Tuesday its housing market index
(HMI) held steady at 46 in December.
Economists had forecast the HMI to rise to 47.
A reading below
50 indicates more builders view conditions as poor than good.
The three major
HMI components demonstrated mixed performance in early December. The component
charting sales expectations in the next six months jumped by 3 points to 66,
the highest level since April 2022. In the meantime, the component measuring
traffic of prospective buyers fell by 1 point to 31, and the component tracking
current sales conditions was unchanged at 48.
Commenting on
the latest report, NAHB Chairman Carl Harris noted that while builders are
expressing concerns that high interest rates, elevated construction costs and a
lack of buildable lots continue to act as headwinds, they are also anticipating
future regulatory relief in the aftermath of the election. “This is reflected
in the fact that future sales expectations have increased to a nearly
three-year high,” he added.
Meanwhile, NAHB Chief Economist Robert Dietz revealed
that NAHB is forecasting additional interest rate cuts from the Federal Reserve
in 2025, but with inflation pressures still present, they have reduced that
forecast from 100 basis points to 75 basis points for the federal funds rate. “Concerns
over inflation risks in 2025 will keep long-term interest rates, like mortgage
rates, near current levels with mortgage rates remaining above 6%,” he said.