News of Donald Trump’s re-election set off polarizing forecasts in early November, but one group apparently celebrating the development is the nation’s homebuilders.
Builder sentiment rose three points this month, according to the National Association of Homebuilders/Wells Fargo Housing Market Index. The overall outlook of the industry remained negative, but the gain represented the index’s biggest jump in seven months, Bloomberg reported.
All three of the components that make up the index saw increases this month. The most notable jump is the seven-point gain for builders’ six-month sales outlook, which reached its most optimistic level in two and a half years. The components related to current sales outlook and prospective buyer traffic also each hit six-month highs.
The biggest thing that’s changed from the previous month is the passing of the election, which saw Trump win his way back into office and Republicans seize control of both the Senate and the House of Representatives. Builders are likely hoping regulatory burdens are eased as the political landscape shifts.
Time will tell if the rising optimism will match reality. Mortgage rates have been back on the rise since hitting a two-year nadir in September and builders are still offering incentives to spur demand, including buying down customer mortgage rates.
“While builder confidence is improving, the industry still faces many headwinds such as an ongoing shortage of labor and buildable lots along with elevated building material prices,” NAHB chief economist Robert Dietz said in a statement. Dietz added that there was still uncertainty about the housing market, bond market and direction of policy.
Read more
Construction
National
Homebuilder sentiment notches biggest gain since 2020
Residential
National
Election, looming rate cuts send homebuilder stocks soaring
Construction
National
Warren Buffett bets big on homebuilders
Samuel Tombs, chief economist at Pantheon Macroeconomics, also expressed concern in a note that mortgage rates still need to fall a long way for homeowners to overcome the lock-in effect and Trump’s mass deportation plans could have a negative effect on both the housing market and the construction workforce.
The S&P Homebuilders Select Industry Index, composed of stocks in the sector, is up more than 20 percent year-to-date as of Tuesday morning.