National Housing Trends: Homebuilder Confidence Index on the Rise

One of the things to keep in mind when observing the housing market, is that price is affected by many factors. Keeping an eye on both national and local factors is critical when looking to get a good idea of the future of the housing market. To this end, there are organizations which assess and report trends in the housing market. The National Association of Home Builders (NAHB) releases monthly assessments of homebuilder confidence. The NAHB homebuilder confidence index is a look at how optimistic homebuilders are sales of single family houses in the near future. So, what does it all mean, and why is it happening?

The index is compiled through survey of home builders. They are invited to rate their current sales as well as what they expect the next 6 months to look like. Their scores are compiled into an aggregate rating, with scores above 50 being positive, and scores below indicating negative sentiment. Currently, the score is 71, indicating a lot of confidence about the future of the housing market.

While the index jumped after the election which cemented Donald Trump as the president, it slid in the first two months of his presidency before jumping again in March, this time to the highest level in 12 years. The changing political climate is a major factor in the home market. So, a large part of the rise is that builders believe changes in the laws and regulations governing housing will change to affect them positively. One of the main factors is that Donald Trump has sworn to repeal and remove many of the environmental regulations on the construction of new houses. As builders have seen congress and the president moving in this direction, they understand that less regulations will mean cheaper construction.

What this means, is that we could end up seeing a stronger home market in the next few years. While it is important to keep an eye on a number of market factors, this one suggests that there could be increased construction and sale of homes. While the housing market has largely recovered from the Great Recession, many homeowners and businessmen stand to profit if the housing market goes through a boom.  However, we will have to wait and see what surprises await us in the coming years. While things look good now, it remains to be seen whether or not these confident expectations will be met.