Homebuilder confidence fell in the South thanks to rising rates and economic uncertainty, according to the latest data from the National Association of Home Builders.
- Homebuilder confidence in the South fell to an index of 47 to start 2025, down two points from December but it is still the second-highest level in the last nine months.
Mixed Month. The South was not alone as the Midwest also fell to an index of 44(-4). However, the West rose three points to 42 and the Northeast continues to outpace every other region with a monster ten-point jump to an index of 67 in January.
This is the highest level of any of the regions since June 2022.
Breaking It Down. Current sales conditions as measured by the HMI index improved by three points to 51, and there was a slight uptick in the traffic of prospective buyers, with the gauge increasing by two points to 33. However, expectations for sales over the next six months dropped by six points to 60, influenced by higher interest rates. Despite this warning sign, the future sales outlook remains the strongest among the sub-indices, comfortably exceeding the breakeven mark of 50.
What They’re Saying: NAHB Chief Economist Robert Dietz noted that “NAHB is forecasting a slight gain for single-family housing starts in 2025, as the market faces offsetting upside and downside risks from an improving regulatory outlook and ongoing elevated interest rates…And while ongoing, but slower easing from the Federal Reserve should help financing for private builders currently squeezed out of some local markets, builders report cancellations are climbing as a direct result of mortgage rates rising back up near 7%.”
Bottom Line: