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, according to Bloomberg data.
Still, any reading under 50 indicates more builders view conditions as poor rather than good.
“With the elections now in the rearview mirror, builders are expressing increasing confidence that Republicans gaining all the levers of power in Washington will result in significant regulatory relief for the industry that will lead to the construction 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 average rate on a 30-year fixed rate loan holding at 6.78% last week from 6.79% a week earlier, according to Freddie Mac.
Rates on a home loan tend to follow US Treasury yields, which have been rising since mid-September due in part to investors anticipating a Trump victory and his proposed policies around taxes and tariffs. The average rate on a 30-year fixed mortgage fell as low as 6.08% in early September.
While the stock market cheered the election result, the bond market has concerns, as indicated by a rise for long-term interest rates,” said NAHB chief economist Robert Dietz. There is also policy uncertainty in front of the business sector and housing market as the executive branch changes hands.
The NAHB survey showed builders continue to offer concessions in November.
The survey found that 60% of builders used some sort of sales incentive to close the deal, slightly 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 average price reduction was 5%, slightly lower than 6% last month.
The gauge measuring the sales outlook over the next six months rose 7 points to 64. The prospective-buyer traffic gauge gained 3 points, while the NAHB index of current sales conditions rose 2 points in November.
