US homebuilder optimism drops slightly but stays elevated

National Association of Home Builders posts decline of 2 points in October

New York /
Oct.October 18, 2016 11:50 AM

U.S. homebuilders remain confident despite a slight slip in optimism over the housing market.

Homebuilder confidence decreased by two points to 63 between September and October, according to the National Association of Home Builders housing market index. Last month’s score of 65 was the highest since last year, when it was also 65, and the highest score since the recession. Expectations for the next six months also fell by two points to 69.

“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,” NAHB chief economist Robert Dietz told the Wall Street Journal.

The housing market has seen steady growth since 2011, aided by job growth and low interest rates. However low inventory is pushing prices up and that means fewer sales. The number of new home sales, which makes up about 10 percent of the single-family home market, fell in August after hitting a multi-year high July, according to the Commerce Department. The number of previously-owned home sales fell in both July and August.

Builders are responding to the demand. While housing starts remain below the 40-year average of 1.4 million a year, August the largest gain in number of permits requested for single-family homes in two years.

The builder confidence index is a metric for how likely homebuilers are to kick off construction on projects, which creates jobs and stimulates the sale of a range of home products and materials. [WSJ]Chava Gourarie


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