Builders’ confidence in the market for new single-family homes slipped as the National Association of Home Builders' housing market index fell to 72 in January from 74 in December.

The December level was the highest since July 1999.

IFR's poll of economists predicted the index would be 72.

“Builders are confident that changes to the tax code will promote the small business sector and boost broader economic growth,” NAHB Chairman Randy Noel said. “Our members are excited about the year ahead, even as they continue to face building material price increases and shortages of labor and lots.”

The HMI gauge of future sales expectations has remained in the 70s, a sign that housing demand should continue to grow in 2018,” according to NAHB Chief Economist Robert Dietz. “As the overall economy strengthens, owner-occupied household formation increases and the supply of existing home inventory tightens, we can expect the single-family housing market to make further gains this year.”

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as either "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as either "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.

The current single-family home sales index dipped to 79 from 80, the sales expectations index for the next six months slid to 78 from 79; and the traffic of prospective buyers index dropped to 54 from 58.

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Gary Siegel

Gary Siegel

Gary Siegel has been at The Bond Buyer since 1989, currently covering economic indicators and the Federal Reserve system.