The National
Association of Homebuilders (NAHB) reported on Thursday that its housing market
index (HMI) increased to 47 in January 2025 from an unrevised December 2024 reading of 46. This represented the highest reading since April 2024
(51).
Economists had expected the HMI to slip to 45.
A reading below
50 indicates more builders view conditions as poor than good.
According
to the report, two of all three major HMI components demonstrated gains in
early January. The component tracking current
sales conditions jumped by 3 points to 51 and the component measuring traffic
of prospective buyers climbed by 2 points to 33. Meanwhile, the component
charting sales expectations in the next six months plunged 6 points to 60, due, in
part, to the elevated interest rate environment.
Commenting on
the latest report, NAHB Chairman Carl Harris noted that the U.S. builders are
facing continued challenges for housing demand in the near term, with mortgage
rates up from nearly 6.1 per cent in late September to above 6.9 per cent now. “Land is
expensive and financing for private builders remains costly. However, there is
hope that policymakers are taking the impact of regulatory hurdles seriously
and will make improvements in 2025,” he added.
Meanwhile, NAHB
Chief Economist Robert Dietz revealed that NAHB is forecasting a slight gain
for single-family housing starts in 2025, as the market faces offsetting upside
and downside risks from an improving regulatory outlook and ongoing elevated
interest rates. “And while ongoing, but slower easing from the Federal Reserve
should help financing for private builders currently squeezed out of some local
markets, builders report cancellations are climbing as a direct result of
mortgage rates rising back up near 7 per cent,” he said.