Builder confidence improved for the third consecutive month in November, the National Association of Home Builders (NAHB) reported.

Each month, NAHB/Wells Fargo surveys builders, asking them to rate single-family home sales over the next six months as good, fair or poor. The survey also asks builders to rate traffic of prospective homebuyers and other topics as high, average or low. Scores are then calculated and any number above 50 indicates that more builders view market conditions as good/high than poor/low.

In November, builder confidence in the market for newly built single-family homes was 46, up three points from October. The index charting current sales conditions rose two points to 49, and the component measuring sales expectations in the next six months increased seven points to 64. 

“Looking ahead to 2025, my baseline expectation is that single-family home construction is poised to steadily increase, bolstered by modest declines in financing costs for builders and buyers and by the scarcity of existing homes due to the ongoing mortgage rate lock-in effect,” First American Deputy Chief Economist Odeta Kushi said. 

The latest survey showed that 31% of builders cut home prices in November. That percentage is mostly unchanged since July. The average price reduction was 5%, slightly below the 6% rate posted in October. The use of sales incentives was 60% in November, slightly down from 62% in October.

“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,” said NAHB Chairman Carl Harris, a custom home builder from Wichita, Kansas. “This is reflected in a huge jump in builder sales expectations over the next six months.”

Looking at the three-month averages for regional Housing Market Index scores, the Northeast increased four points to 55, the Midwest moved three points higher to 44, the South increased one point to 42 and the West remained flat at 41.

“While builder confidence is improving, the industry still faces many headwinds such as an ongoing shortage of labor and buildable lots along with elevated building material prices,” said NAHB Chief Economist Robert Dietz. “Moreover, while the stock market cheered the election result, the bond market has concerns, as indicated by a rise for long-term interest rates. There is also policy uncertainty in front of the business sector and housing market as the executive branch changes hands.”