Confidence among America’s home builders unexpectedly jumped upward in December, hitting its highest level since July 1999, the National Association of Home Builders said Monday.
The 18-year high of 74 in December on the National Association of Home Builders/Wells Fargo Housing Market Index was due to falling unemployment, rising demand for housing and an improved regulatory environment.
This is higher than during the housing boom.
“Housing market conditions are improving partially because of new policies aimed at providing regulatory relief to the business community,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas.
All three components on the index registered gains in December. The component measuring buyer traffic jumped eight points to 58, the index gauging current sales conditions rose four points to 81 and the index charting sales expectations in the next six months increased three points to 79, the NAHB said.
“The HMI measure of home buyer traffic rose eight points, showing that demand for housing is on the rise,” said NAHB Chief Economist Robert Dietz. “With low unemployment rates, favorable demographics and a tight supply of existing home inventory, we can expect continued upward movement of the single-family construction sector next year.”
The rise in confidence is spread throughout the country, with the biggest rise in the heartland of America and the smallest on the coasts.
“Looking at the three-month moving averages for regional HMI scores, the Midwest climbed six points to 69, the South rose three points to 72, the West increased two points to 79 and Northeast inched up a single point to 54,” the NAHB said.
Home building is a key driver of economic growth and jobs in the U.S. Housing accounts for more than 15 percent of economic output. Construction jobs tend to be high productivity and relatively high wage jobs for American workers, particularly for young men and those without a college education.