It is a new golden age for American homebuilders.
Homebuilder confidence unexpectedly jumped higher in December. The National Association of Home Builders/Wells Fargo Housing Market Index rose 5 points to 76, the highest reading since June 1999.
The index was already near its 2019 highs at 70 in November and was expected to remain at that level. Beyond jumping higher in December, November was revised up to 71.
This is a vast improvement from a year ago, when the index stood at 56 in December. Back then builders were worried that tumultuous financial markets and a Fed that seemed determined to keep hiking rates would hurt the housing market.
A combination of very strong consumer sentiment, a strong labor market, low mortgage rates, and a low supply of existing homes is behind the December surge.
All three of the indexes components–current sales conditions, sales expectations in the next 6 months, and buyer traffic–were up.
Builder sentiment is highest and still rising in the West, where it registered 84. It improved in the Midwest by 5 points to 63. It rose in the South to 76 and fell 2 points in the Northeast to 61.
All reading above 50 indicates expansion.