Tax cuts are still making homebuilders feel better, even as mortgage rates rise to the highest level in more than four years.
Builder confidence was unchanged in February from the prior month, remaining at 72 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Anything above 50 is considered positive sentiment.
The index is up from 65 in February 2017 and hit a cyclical high of 74 last December, just as the Republican tax cut plan was being passed.
“Builders are excited about the pro-business political climate that will strengthen the housing market and support overall economic growth,” said NAHB chairman Randy Noel, a custom home builder from LaPlace, LA.
“However, they need to manage supply-side construction hurdles, such as shortages of labor and lots and building material price increases,” he added.
Future sales expectations appear to be driving builder confidence. That component of the index rose to a post-recession high of 80, while the index measuring buyer traffic held steady at 54. Current sales conditions, however, fell one point to 78.
“With ongoing job creation, increasing owner-occupied household formation, and a tight supply of existing home inventory, the single-family housing sector should continue to strengthen at a gradual but consistent pace,” said NAHB chief cconomist Robert Dietz.