Home Builder Index Falls from Post-Recession High
Builder confidence in the market for newly constructed single-family homes fell by two points in October, the National Association of Home Builders reported yesterday.
The NAHB/Wells Fargo Housing Market Index fell to 63 in October from 65 in September. Two of the three HMI components posted losses in October. The component gauging current sales conditions dropped two points to 69, while the index charting buyer traffic fell one point to 46. Meanwhile, the index measuring sales expectations in the next six months rose one point to 72.
Regionally, on a three-month moving basis, the West increased two points to 75 while the Northeast, Midwest and South each posted one-point gains to 43, 56 and 65, respectively.
“This still-solid level points to generally positive sentiment among home builders,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. “The strengthening sales outlook bodes well for new home construction, as inventories of completed homes remain lean.”
Any number over 50 indicates that more builders view conditions as good than poor.
“The October reading represents a mild pullback from a jump in September, and indicates that the housing market continues to make slow and steady gains,” said NAHB Chief Economist Robert Dietz. “Moreover, mortgage rates remain low and the HMI index measuring future sales expectations has been over 70 for the past two months. These factors will sustain continued growth in the single-family market in the months ahead.”
However, the report noted builders in many markets continue to express concerns about shortages of lots and labor.
Last week, the Mortgage Bankers Association Builder Application Survey for September showed mortgage applications for new home purchases fell by 7 percent from August but rose by 3 percent from a year ago. MBA Vice President of Research and Economics attributed the September drop to “typical declines” in building activity at this time of the year, also citing labor costs.
