Builders’ Confidence Wanes in October
Builder confidence in the market for newly-built, single-family homes dropped in October as concerns mounted over rising mortgage rates and uncertainty sparked by the government shutdown, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
Still, “builder optimism remains above 50 and we are still seeing signs of pent-up demand in many markets across the country,” says NAHB Chairman Rick Judson. “This slight dip in builder sentiment is the result of continuing challenges in the marketplace with regard to the cost and availability of labor and lots and uncertainty in Washington.”
Overall, builder confidence posted a reading of 55 on the index in October. Any number above 50 indicates that more builders view conditions as “good” rather than “poor.” NAHB Chief Economist David Crowe expected that once the government impasse was resolved, builder and consumer optimism would bounce back.
“Interest rates remain near historic lows and we don’t expect the level of rates to have a major impact on sales and starts going forward,” Crowe says.
The index measures builder perceptions in single-family home sales, sales expectations for the next six months, and buyer traffic. All three indicators dropped two points in October. Current sales conditions registered 58 on the index; sales expectations were 62; and buyer traffic fell to 44.