Home Builder Confidence Falls in November

Builder confidence for newly constructed single-family homes fell in November after rising for five consecutive months, the National Association of Home Builders reported yesterday.  

The NAHB/Wells Fargo Housing Market Index came in at 62 in November, a three-point drop from October’s upwardly revised 65. The October reading had represented a 10-year high. Two of the three HMI components posted losses in November. The index measuring sales expectations in the next six months fell by five points to 70, while the component gauging current sales conditions decreased by three points to 67. Meanwhile, the index charting buyer traffic rose by one point to 48.  

Regionally, the West increased four points to 73 while the Northeast rose three points to 50. Meanwhile the Midwest and South held steady at 60 and 65, respectively. Any number over 50 indicates that more builders view conditions as good than poor.

“The November report is pullback from an unusually high October, and is more in line with the consistent, modest growth that we have seen throughout the year,” said NAHB Chief Economist David Crowe. “A firming economy, continued job creation and affordable mortgage rates should keep housing on an upward trajectory as we approach 2016.”  

Last week, the Mortgage Bankers Association’s Builder Application Survey data for October showed mortgage applications for new home purchases fell by 8 percent from September.   

MBA estimated new single-family home sales ran at a seasonally adjusted annual rate of 495,000 units in October. The seasonally adjusted estimate for October represents a decrease of 9.7 percent from September’s pace (548,000 units). On an unadjusted basis, MBA estimated 39,000 new home sales in October, a decrease of 7.1 percent from 42,000 in September.  

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said the decline in the NAHB index, particularly in the South, could reflect weakening conditions in Texas.  

“While November’s drop was disappointing, the NAHB index remains even with its average for the past six months and is consistent with improving single-family home construction,” Vitner said.