US homebuilders’ confidence eases slightly

News Courtesy : CNBC, Tuesday, 18 Oct 2016

US homebuilders' confidence eases slightly

U.S. homebuilders’ confidence eased this month after surging towards the highest level in nearly annually in September.

Even so, builders remain optimistic overall about sales development in months ahead, a reflection of how steady job gains are leading more Americans to buy newly built homes.

The National Association of Home Builders/Wells Fargo builder sentiment index released Tuesday fell two points this month to 63 after a reading of 65 in September.

Readings above 50 indicate more builders view sales conditions nearly as good instead of poor. The index has held above 60 the past 2 months after hovering at 58 earlier this year.

The pullback in the latest builder sentiment index is in line with what analysts polled by FactSet were expecting.

Builders’ view of current sales along with a gauge of traffic by prospective buyers declined. Their outlook for sales on the next 6 months increased.

A strengthening job market and mortgage rates hovering near all-time lows have helped stoke need for homeownership, pushing up sales of brand new and previously occupied homes. That, consequently, has been great news for homebuilders.

“The October reading represents a mild pullback from the start September, and indicates that the housing market will continue to make slow and steady gains,” said Robert Dietz, the NAHB’s chief economist.

Despite declining in August, sales of brand new U.S. homes were running 20.1 percent higher through the first eight months of this year compared to exactly the same stretch of 2015.

All told, new home sales declined 7.6 percent in August to some seasonally adjusted annual rate of 609,000 units. That followed a surge in July that drove sales above a rate of 659,000 units, the quickest pace since October 2007. September new-home sales figures are due out next week.

The trend helps maintain builders’ overall positive outlook and fueled a pickup in home construction for much of this year. Overall housing starts are up 6.1 percent through August from the year earlier, with construction of single-family houses leading the way.

More construction is needed tackle a chronic shortage of available properties for sale, in both the brand new-home category as well as in existing homes. But homebuilders in many markets continue to face rising land and labor costs.

This month’s builder index was according to 299 respondents.

A way of measuring current sales conditions for single-family homes slipped two points to 69, while builders’ look at sales on the next 6 months increased one point to 72. A gauge of traffic by prospective buyers dipped some point to 46.

Declined in the South and West, even though on a regional basis, the index found builder sentiment improved in the Northeast and Midwest.

Though new homes represent only a fraction of the housing market, they may have an outsized effect on the economy. According to NAHB data, each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue.

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Post Author: CNBC

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