The first indicator of builders’ sentiment for 2013 held steady at 47, the same level as December 2012. The three subcomponents of the NAHB/Wells Fargo Housing Market Index changed in every direction possible; the current sales index remained the same at 51, the index for future sales fell one point to 49, and the index for traffic rose one point to 37.
Builders and home buyers took a breath in December as the political agenda remained cloudy up to January 2nd. In addition, builders’ confidence has been rising steadily for eight consecutive months and the uncertainty of taxes, government spending, potential cuts to housing tax incentives and the on-going weak economy had to finally slow the advancing builder index. While the survey took place after Congress agreed to a tax regime, the uncertainty damage had already done a job on consumers’ confidence and the builders’ pause is the result.
Regional indexes smoothed with a three-month moving average increased for all regions. The Northeast and Midwest increased two points to 36 and 50 respectively. The South index rose 3 points to 49 and the West was up four points to 51. This is the first three-month moving average regional index at or above 50 since 2006 and the first time for the Midwest since 2005.
Extremely low mortgage rates, recovering house prices in most markets and pent up demand will provide forward movement in home building and home buying in 2013. NAHB expects housing starts to rise about 20 percent in 2013 over the likely end result of 775,000 starts in 2012.