Homebuilder confidence surged in November as the election of Donald Trump and a Republican sweep of the House and Senate boosted optimism about the housing market.
The National Association of Home Builders (NAHB) said its monthly confidence index rose to 46, the highest level since April. This was higher than even the most bullish forecasts and three points above the October level.
The sentiment boost reflects builders’ beliefs that the incoming administration and its Republican allies on Capitol Hill will adopt policies to facilitate increased construction activity.
“With the elections now in the rearview mirror, builders are expressing increasing confidence that Republicans gaining all the levers of power in Washington will result in significant regulatory relief for the industry that will lead to the construction of more homes and apartments,” said NAHB Chairman Carl Harris. “This is reflected in a huge jump in builder sales expectations over the next six months.”
The three components of the confidence index were all up in November. Builders were more upbeat about current sales conditions, they expect an increase in traffic from prospective buyers, and they are optimistic about future sales.
Home affordability has been a major headache for many Americans, particularly younger Americans looking to buy their first home. First time homebuyers have declined as a share of overall purchases to the lowest level in decades, according to the National Association of Realtors.
An increase in home building could alleviate some of that pressure, particularly if long-term interest rates decline and bring down mortgage costs.