The National Association of Home Builders (NAHB) Housing Market Index, which is a near real-time read on builder confidence, rose four points to 35 in January. Among the components of the index, current sales conditions rose four points to 40, buyer traffic increased three points to 23, and sales expectations for the next six months moved two points higher to 37. Any reading above 50 on this index, which runs from 0 to 100, signals expansion while readings below 50 signal contraction.
What’s the bottom line? The rise in confidence among home builders this month follows declines seen every month last year. NAHB Chairman Jerry Konter noted, “It appears the low point for builder sentiment in this cycle was registered in December, even as many builders continue to use a variety of incentives, including price reductions, to bolster sales.” He added, “The rise in builder sentiment also means that cycle lows for permits and starts are likely near, and a rebound for home building could be underway later in 2023.”