U.S. homebuilder confidence reached its highest level since June 1999, according to new data from the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index.
The latest reading of home builder confidence was 76 basis points in December. Anything above 50 is considered positive, according to the organization.
“Builders are continuing to see the housing rebound that began in the spring, supported by a low supply of existing homes, low mortgage rates and a strong labor market,” says NAHB chairman Greg Ugalde, a home builder and developer from Connecticut.
Though the metric is currently high, construction activity is still lagging due to external factors, says NAHB chief economist Robert Dietz.
“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,” he says. “Higher development costs are hurting affordability and dampening more robust construction growth.”
Confidence among homebuilders is calculated using a monthly survey that NAHB has overseen for 30 years.
Regionally, homebuilder confidence fell two points in the northeast to 62 points, while the Midwest increased to 63 points. The south moved higher to 76 points and homebuilder confidence in the west rose to 84 points.