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We’ve seen a lot of improvement in economic data over the last several weeks, but December’s reading on homebuilder sentiment may have taken the cake. While economists were forecasting this month’s reading to come in unchanged from November’s reading of 63, the actual reading surged to 70. That’s the highest reading since July 2005, and it’s tied for the second largest beat relative to expectations going back to 2003.
The table to the right breaks down this month’s report by present and future sales, traffic, and regional sentiment. As shown, it was green across the screen in December with every metric increasing on a month/month basis. Not only did every category increase, but they also all hit highs for the current cycle. Homebuilders are now extremely optimistic about future sales.
The chart below shows changes in homebuilder sentiment by region going back to 2005. Here again, sentiment in every region is now at cycle highs. Even in the Northeast and South regions where sentiment was showing signs of faltering, those indices are now at new cycle highs.