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First Cut: December NAHB Housing Market Index highest in over 20 years

Recent increases in mortgage interest rates have not put a dent in builders’ confidence. The NAHB/Wells Fargo Housing Market Index climbed to 76 in December from 71 in the prior month (previously 70) and reached its highest level since 77 in June 1999. The level is not far below the all-time high of 78 in December 1998.

Much of the strength in the reading came from a bump upward for present sales to 84 in December from 77 in November, and was its highest level since 85 in June 1999. Expected sales remained solid at 79 in December after 78 in November and was the highest since February 2018 when it was at 80. Buyer traffic reached its highest in two years at 58 in December after 54 in November and was the same as the 58 in December 2018.

While it seems unlikely that this pace will hold up into January, it speaks to consumers’ appetite for homebuying in spite of some increases in mortgage rates. Existing home stock is not sufficient to meet demand for units in the more sought-after sizes and price ranges. Builders are seeing a willingness on the part of homebuyers to commit to units not yet started to ensure affordable financing is locked in.

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