The National Association of Home Builders’ Housing Market Index measures builder confidence in the market for newly built single-family homes. It is an important indicator of housing market health because, when builders are optimistic and building more homes, it helps balance supply and demand, gives buyers more options to choose from, and helps moderate price increases. This is especially true when the inventory of homes available for sale is low, as it has been this year. In December, the NAHB’s survey – which is scored on a scale where any number above 50 indicates more builders view conditions as good than poor – hit 84, matching this year’s highest reading. Robert Dietz, NAHB’s chief economist, says lack of inventory continues to be the market’s biggest challenge. “The most pressing issue for the housing sector remains lack of inventory,” Dietz said. “Building has increased but the industry faces constraints, namely cost/availability of materials, labor, and lots.” Despite those challenges, all three of the indexes components scored well above 50 in December, including the gauge of current sales conditions which rose to 90. (source)
