Homebuilder confidence was flat in December from a month earlier and came in below analysts’ estimates amid uncertainty over how quickly mortgage rates will fall.

The National Association of Home Builders (NAHB)/Wells Fargo housing market index stood at 46 in December, below economists’ estimates of 47, according to Bloomberg data.

Any reading below 50 indicates that more builders view conditions as bad rather than good.

“While builders are expressing concern that high interest rates, high construction costs and a lack of buildable lots continue to act as headwinds, they are also anticipating future regulatory easing after the election,” said Carl Harris, president of NAHB, a custom home builder. of Wichita, Kan., said in a news release “This is reflected in the fact that expectations for future sales have risen to a nearly three-year high.”

Mortgage rates have fallen for the past three consecutive weeks, with the average 30-year mortgage rate remaining at 6.6%. according to Freddie Mac.

There is a growing expectation that the Federal Reserve will cut the federal funds rate by 25 basis points at the end of its meeting on Wednesday. The decrease has already been baked into current mortgage interest rates, so housing experts don’t expect mortgage rates to drop further.

NAHB Chief Economist Robert Dietz writes, “Concerns about inflation risks in 2025 will keep long-term interest rates, such as mortgage rates, near current levels, with mortgage rates that will remain above 6%.