US homebuilder confidence at highest since June 1999

Homebuilder confidence in the States hit a more than two-decade high at the end of 2019, even as scarce labour and land continued to limit the supply of new homes.

The National Association of Homebuilders' Housing Market Index jumped from November's upwardly revised level of 71.0 points to 76.0 for December - reaching its highest level since June 1999.

A "low" supply of existing homes, reduced mortgage rates and a "strong" jobs market all buoyed sentiment.

"While we are seeing near-term positive market conditions with a 50-year low for the unemployment rate and increased wage growth, we are still underbuilding due to supply-side constraints like labor and land availability," the NAHB said.

"Higher development costs are hurting affordability and dampening more robust construction growth."

Economists had forecast a much more restrained improvement in the survey to a reading of 71.0 points.

A sub-index tracking current sales conditions climbed by seven points to 84.0, whilst another linked to sales expectations over the next six months rose by one point to 79.0 and another for the traffic of prospective buyers increased by four points to 58.0.

November's preliminary HMI reading was 70.0.

"The consensus was inexplicably soft, given the rising trend in mortgage demand, but this is way better than we dared to hope," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

"Housing is the real bright spot of the economy, propelled by low mortgage rates and the strong labor market, and we expect further increases in sales and construction activity over the next few months, at least."