2019 Offers Better Outlook for Builders

The recent increase in builder confidence in February was the second monthly gain, starting 2019 on an upward trend. Some housing economists say the sentiment reading can be an early indicator for the pace of construction.

The Wells Fargo/National Association of Home Builders' index data tracks sentiment of current sales conditions, up 3 points for the month, and expectations over the next six months. These readings were at 67 points and 68 points, respectively. Buyer traffic rose 4 points to 48. Realtor.com reports that the market slowdown of 2018 is, in hindsight, starting to look more like a "pause," instead of a beginning of the cycle's end.

Big picture: Builders are in a sweet spot: economic conditions like a strong job market are helping them sell more homes, and falling mortgage rates are making that job even easier. But NAHB continued to note that “affordability remains a critical issue.” Builders say regulations are still “excessive,” and the Trump administration’s tariffs have made raw materials much more expensive.

Read more