Builders create the homes we buy and live in, but they also serve another important purpose. They are a good barometer for where the real estate market is heading. After all, it’s their business to determine whether or not people are buying homes. When builders are confident, there’s likely a good reason for it.
According to the National Association of Home Builders’ most recent Housing Market Index, builder’s confidence has increased in January. The NAHB’s index measures builder confidence on a scale where any number above 50 indicates that builders view conditions as positive. In January, it increased two points to 58. Randy Noel, NAHB’s chairman, says builder sentiment is high for a number of reasons.
“The gradual decline in mortgage rates in recent weeks helped to sustain builder sentiment,” Noel said. “Low unemployment, solid job growth, and favorable demographics should support housing demand in the coming months.” In other words, builders expect home buyer demand to remain high going into this spring’s sales season.