Washington D.C., USA: Homebuilder confidence in the U.S. has unexpectedly improved in the month of January, according to a report released by the National Association of Home Builders on Wednesday.
The report said the NAHB/Wells Fargo Housing Market Index rose to 58 in January after slumping to 56 in December. Economists had expected the index to come in unchanged.
The notable decrease seen in the previous month dragged the housing market index down its lowest level since hitting 54 in May of 2015.
NAHB said a recent gradual decline in mortgage rates helped to sustain builder sentiment and predicted low unemployment, solid job growth and favorable demographics would support housing demand in the coming months.
“Builders need to continue to manage rising construction costs to keep home prices affordable, particularly for young buyers at the entry-level of the market,” said NAHB Chief Economist Robert Dietz.
He added, “Lower interest rates that peaked around 5 percent in mid-November and have since fallen to just below 4.5 percent will help the housing market continue to grow at a modest clip as we enter the new year.”
The unexpected rebound by the housing market index reflected increases by all three of the component indexes, with the component gauging expectations in the next six months climbing to 64 in January from 61 in December.
The index measuring current sales conditions also rose to 63 in January from 61 in December, while the metric charting buyer traffic inched up to 44 from 43.
Data on new residential construction in December will not be released as scheduled on Thursday due to the partial government shutdown.
NAHB estimates that the December data would show that single-family starts ended the year totaling 876,000 units, reflecting a 3 percent increase compared to the 2017 total of 848,900.
However, NAHB said the slowdown in sales during the fourth quarter of 2018 has left new home inventories elevated in some markets.