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US homebuilder confidence drops slightly from 18-year high

Tax law and construction costs could spell trouble
January 17, 2018 11:30AM

(Credit: Pexels)

(Credit: Pexels)

Though homebuilder confidence dropped slightly this month, it still reached the second-highest level seen since 2005.

According to the National Association of Home Builders/Wells Fargo, confidence in the U.S. market for new single-family homes fell two points to a level of 72. December’s survey showed confidence at 74, marking the highest level seen since 1999.

“The HMI gauge of future sales expectations has remained in the 70s, a sign that housing demand should continue to grow in 2018,” NAHB chief economist Robert Dietz said in a statement. “As the overall economy strengthens, owner-occupied household formation increases and the supply of existing home inventory tightens, we can expect the single-family housing market to make further gains this year.”

Still, rising construction costs and the new tax law could present some challenges in coming months, Bloomberg reported. The tax overhaul limited deductions for mortgage interest and property taxes, which could slow sales.

In the Northeast, the three-month moving average HMI score jumped 5 points to 59. [Bloomberg]Kathryn Brenzel