Home builder sentiment remains fairly downbeat despite the recent easing in mortgage rates, according to Wells Fargo economists Charlie Dougherty and Jackie Benson and economic analyst Ali Hajibeigi.
They noted the NAHB housing market index (HMI) fell two points to 37 in January, ending a three-month streak of gains.
They also noted that 75 percent of survey responses arrived before Jan. 7, ahead of the Trump Administration's new housing policy announcements.
That said, they said the monthly drop in the headline index suggests builders are still dealing with disappointing demand as 2026 gets underway.
According to the trio, the underlying details paint the picture: Perceptions of sales conditions, buyer traffic and sales expectations each fell back in January, partially reversing recent gains and the high prevalence of builders utilizing incentives such as rate buy-downs or price discounts is another indication that demand is still lackluster.
They also said that In January, 65 percent of builders used a sales incentive, down slightly from December but still elevated compared to recent norms,
They added that given builders are also contending with the headwinds of elevated inventory levels, rising construction costs and high interest rate environment, the latest HMI print provides additional evidence that a significant near-term ramp up in production is unlikely.
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