Homebuilder Confidence Retreats from 11-Year High

Confidence among homebuilders retreated in January from an 11-year high, suggesting optimism has plateaued following Donald Trump's election victory, a report from the National Association of Home Builders/Wells Fargo showed Wednesday.

The builder sentiment gauge fell to 67 (the forecast was 69) from a revised 69 in December; readings below 50 indicate respondents report poor market conditions. The gauge of current sales dropped to 72 from 75, the index of prospective buyer traffic fell to 51 from 52 and the measure of the six-month sales outlook fell to 76 from 78.

Even with the January decline, the jump in confidence since Trump's election in November indicates homebuilders expect the president-elect and new Congress to lower regulatory barriers to developing and buying homes. At the same time, rising mortgage rates may temper confidence in the real estate industry and damp sales in the coming months. More broadly, the optimism mirrors that of other sectors and of consumers, who see Republican policies boosting the economy.

"NAHB expects solid 10% growth in single-family construction in 2017, adding to the gains of 2016," Chief Economist Robert Dietz said in a statement. "Concerns going into the year include rising mortgage interest rates as well as a lack of lots and access to labor."

Builder confidence declined in three of four regions, including the biggest drop in the West since February 2014. Confidence unchanged in Midwest.