Builder Confidence High, Interest Rates Likely to Stay Low in Remainder of 2016

The market look for home builders looks strong and if the trend continues, this should carry into the New Year. Builder confidence for newly-built, single-family homes held steady in November at a level of 63 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

According to the National Association of Home Builders (http://bit.ly/2g1Btuw), this is the third consecutive month sentiment has held above 60, hinting at slow, gradual growth. Demand for new housing is growing thanks to ongoing job creation, rising incomes and attractive mortgage rates.

It is worth noting that most of the November HMI responses originated before the elections. Thus, builder confidence remained unchanged as the industry awaited the results.

What effect could a Donald Trump presidency have on the housing and mortgage markets in the long term?  Just a few weeks ago, most analysts foresaw a win for former Secretary of State Hillary Clinton, along with a slight increase in interest rates in December by the Federal Reserve. That wasn’t the case, but interest rates will likely remain low, according to Rick Sharga, executive vice president of Ten-X, formerly Auction.com, a real-estate auction site.

“I don’t believe that there will be any significant changes to interest rates, at least in the near term, since the underlying fundamentals that have led us into a low-interest-rate environment haven’t changed,” Sharga told Marketwatch.com.  (http://on.mktw.net/2fcrSgG)

He believes a Trump presidency being good for the housing and mortgage markets in the long term. “He seems committed to bringing regulatory relief — and regulatory certainty — to the financial-services industry, which should make more credit more available to average home buyers who have been locked out of the market by today’s extraordinarily tight credit standards,” he said.

As a result, home buying should remain strong in 2017.