Homebuilders rose following Donald Trump’s election victory, though expectations for the housing market still remained muted in November.
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index rose three points to 46 in November, up from 43 from the previous month and marking the third consecutive monthly gain. November’s reading was higher than economists’ estimates of 43, in accordance with Bloomberg data.
Still, any reading under 50 indicates more builders view conditions as poor slightly than good.
“With the elections now within the rearview mirror, builders are expressing increasing confidence that Republicans gaining all of the levers of power in Washington will end in significant regulatory relief for the industry that may result in the development of more homes and apartments,” NAHB chairman Carl Harris, a custom home builder from Wichita, Kan., wrote in a press statement.
Meanwhile, mortgage rates continued their recent rise, with the common rate on a 30-year fixed rate loan holding at 6.78% last week from 6.79% per week earlier, in accordance with Freddie Mac.
Rates on a house loan are likely to follow US Treasury yields, which have been rising since mid-September due partially to investors anticipating a Trump victory and his proposed policies around taxes and tariffs. The typical rate on a 30-year fixed mortgage fell as little as 6.08% in early September.
“While the stock market cheered the election result, the bond market has concerns, as indicated by an increase for long-term rates of interest,” said NAHB chief economist Robert Dietz. “There may be also policy uncertainty in front of the business sector and housing market as the chief branch changes hands.”
The NAHB survey showed builders proceed to supply concessions in November.
The survey found that 60% of builders used some form of sales incentive to shut the deal, barely lower than the 62% that used incentives in October. Meanwhile, 31% of builders cut home prices to bolster sales in November, unchanged since July. The typical price reduction was 5%, barely lower than 6% last month.
The gauge measuring the sales outlook over the subsequent six months rose 7 points to 64. The possible-buyer traffic gauge gained 3 points, while the NAHB index of current sales conditions rose 2 points in November.