The National
Association of Homebuilders (NAHB) reported on Wednesday its housing market
index (HMI) jumped to 44 in January 2024 from an unrevised December 2023 reading of 37.
This
marked the second straight monthly improvement in builder sentiment and was the
highest reading since September 2023 (44).
Economists
had forecast the HMI to increase
to 39.
A reading over
50 indicates more builders view conditions as good than poor.
All three major HMI components registered increases in early January. The
component charting sales expectations in the next six months soared 12 points
to 57, returning into positive territory for the first time since August 2023. Meanwhile,
the component tracking current sales conditions surged 7
points to 48, and the component measuring traffic of prospective buyers rose
5 points to 29.
Commenting on
the latest report, NAHB Chairman Alicia Huey said lower interest rates improved
housing affordability conditions this month, bringing some buyers back into the
market after being sidelined in the fall by higher borrowing costs.
“Single-family starts are expected to grow in 2024, adding much-needed
inventory to the market,” she added but warned that builders will face growing
challenges with building material cost and availability, as well as lot
supply.”
Meanwhile, NAHB
Chief Economist Robert Dietz suggested that as home building expands in 2024,
the market will see growing supply-side challenges in the form of higher prices
and/or shortages of lumber, lots and labour.