Builder confidence holds steady in the last month of the year 

While home builders didn't report a late-year boost in sales, they appear to be feeling increasingly optimistic about what's to come in 2025.

Builder confidence remained steady at 46 in December, according to the National Association of Home Builders' monthly index, which is based on ratings of three market conditions. That snapped a three-month streak of improvement.

But while the rating for current single-family sales was unchanged from November and buyer traffic notched down slightly, the six-month sales outlook was up, with expectations hitting a three-year high, said Robert Dietz, chief economist at NAHB.

"While builders are expressing concerns that high interest rates, elevated construction costs and a lack of buildable lots continue to act as headwinds, they are also anticipating future regulatory relief in the aftermath of the election," Dietz said. 

Demand for new homes rising: This increasing confidence around future sales comes at a time when applications for mortgages on new homes continue to pick up steam. In November, applications were up 7.2% compared to a year ago, according to the Mortgage Bankers Association. 

That year-over-year increase in applications continues a trend seen every month since February 2023, "as prospective buyers continue to favor new homes given the affordability challenges and low existing inventory," said Joel Kan, MBA's deputy chief economist.

Incentives, price cuts unchanged: The share of builders offering incentives to buyers (60%) also held steady this month, as did the percentage who cut prices (31%). The average price reduction was 5%, which was also the same as November. 

Northeast builders most optimistic: Broken down by region, builders in the Northeast are most optimistic, with a three-month rolling average index score of 57. That's followed by the Midwest (46), the South (44) and the West (40).