As we are heading into a new administration, builder confidence remained optimistic for the start of 2017 as there is an increased vigor that President-elect Trump’s team will bring in a new era of a pro housing business environment. Builder confidence decreased by just 2 point to 67, down from December’s revised 69, according to the National Association of Home Builders and Wells Fargo Housing Market Index. The level of confidence in December was the highest level since July of 2005. In the regional level, the Northeast saw a decease in confidence of 5 points from a 57 in December to January’s level of 52. The January number still is significantly higher than it has been in recent times as well.
The HMI is a weighted average of separate diffusion indices for these three key single-family series. The first two series are rated on a scale of Good, Fair and Poor and the last is rated on a scale of High/Very High, Average, and Low/Very Low. A diffusion index is calculated for each series by applying the formula “(Good-Poor+100)/2” to the present and future sales series and “(High/Very High – Low/Very Low + 100)/2” to the traffic series. Each resulting index is then seasonally adjusted and weighted to produce the HMI.
Based on this calculation, the HMI can range between 0 and 100.
“Builders begin the year optimistic that a new Congress and administration will help create a better business climate for small businesses, particularly as it relates to streamlining and reforming the regulatory process,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas.
Chief Economist for the NAHB Robert Dietz also sees a 10% increase in single family construction in 2017 which will add to the gains of 2016.