Builder Confidence Down in OctoberOctober 22nd, 2013 by Editor
Builder confidence in the market for newly built, single-family homes fell two points in October from a downwardly revised reading in the previous month to a level of 55 on the National Association of Home Builders/Wells Fargo Housing Market Index (NAHB) (HMI).
“A spike in mortgage interest rates along with the paralysis in Washington that led to the government shutdown and uncertainty regarding the nation’s debt limit have caused builders and consumers to take pause,” says NAHB chief economist David Crowe. “However, 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. Once this government impasse is resolved, we expect builder and consumer optimism will bounce back.”
Derived from a monthly survey that NAHB has been conducting for 25 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores from each component are then used to calculate a seasonally adjusted index where any number more than 50 indicates that more builders view conditions as good than poor.
All of the HMI’s three components each fell two points in October. The component gauging current sales conditions registered 58, while the component gauging sales expectations in the next six months posted a reading of 62 and the component gauging traffic of prospective buyers was 44.
Looking at the three-month moving averages for regional HMI scores, the South held steady at 56, the West declined a single point to 60 and the Northeast fell three points to 38. The Midwest posted a one-point gain to 64.