Low mortgage rates and a rising labor market boost US home builders’ confidence
Housing Market Index rose 2 points in August, the second-highest level this year
U.S. home builders are gaining confidence about the market for single-family homes, despite an overall slowdown in the economy.
Builders’ confidence rose two points on August’s Housing Market Index to 60 (out of a maximum 100), the second-highest level this year, according to a monthly survey by the National Association of Home Builders. Expectations for the next six months also increased by one point to 67.
“Historically low mortgage rates, increased household formations and a firming labor market will help keep housing on an upward path during the rest of the year,” NAHB Chief Economist Robert Dietz said in a statement, according to the Wall Street Journal.
The builder confidence index is a metric for how likely they are to begin construction on projects, which spurs job creation and stimulates the sale of a range of home products and materials.
So far this year, home builder sentiment has been up and down. Overall, the index is lower than last year’s levels, as home construction has stalled. Housing starts fell 2 percent in June compared to last June, according to data from the Commerce Department. The highest point of confidence since the recession was 65 in October. [WSJ] — E.B. Solomont