Wells Fargo Reports: Builder Confidence Slips in January

On the heels of a 6-point gain, the NAHB/Wells Fargo Housing Market Index fell 2 points to 67 in January. Confidence declined across components, suggesting a rebalancing following the post-election surge.

Homebuilder Sentiment Dips

After a sizable 6-point jump in December, the NAHB Housing Market Index fell 2 points to 67 in January. All three index components declined on the month. Present sales conditions reported the largest drop, falling 3 points to 72.

Despite the monthly decline, builder confidence remains at a solid level—just 2 points shy of its cycle high. The reading is consistent with modest strengthening in homebuilding.

Confidence Slides in the West

Homebuilder confidence fell in the West, Northeast and the South, while sentiment in the Midwest was unchanged. The West reported the largest drop, falling 11 points. The big drop in the West may be weather-related, given the recent rains and snow.

While challenges for the housing market remain in place, we expect continued gradual improvement in home sales and single- family construction in the year ahead.