Confidence among U.S. homebuilders plunged to a four-month low in October, a result of rising interest rates and uncertainty due to the battle on the horizon over raising the debt ceiling, according to data from the National Association of Home Builders.
The NAHB/Wells Fargo index of builder sentiment dropped to 55 in October, from a revised 57 in September, the NAHB announced today. A reading above 50 indicates more than half of consumers polled believe conditions are conducive to home building.
The numbers indicate that the federal government shutdown – which left New York real estate deal-making in a temporary limbo – also led to a delay on construction spending decisions, Bloomberg News reported. Rising mortgage rates are also stemming growth, experts told Bloomberg News.
“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 a pause,” David Crowe, NAHB’s chief economist, said in a statement to Bloomberg News. Crowe added that once the shutdown was resolved, he expected “builder and consumer optimism will bounce back.” [Bloomberg News] – Hiten Samtani