US: Homebuilder sentiment nosedives – Westpac

Richard Franulovich, Head of FX Strategy at Westpac, notes that the National Association of Homebuilders (NAHB) sentiment index of US posted an eye-catching fall to 60 in November from 68, its lowest levels since mid-2016.

Key Quotes

“The US housing sector has been losing momentum for a few months in the wake of higher rates and last year’s changes to the tax code which saw the deductibility of mortgage interest and state and local property taxes scaled back sharply. If anything it’s a surprise that sentiment among homebuilders held at elevated levels for so long.”

“It’s arguably still too early to definitely say whether Trump’s policies have shifted the US economy onto higher growth path.”

“The tentative overall conclusion is that some sectors of the economy appear to be stronger post-Trump while others are not. Its no surprise that business sentiment and capital goods shipments are stronger, given the focus on deregulation while the corporate sector received a disproportionately larger share of the tax cut compared to households.”