Builder confidence flat in September
Builder confidence held steady in September, the latest sign that the nation’s housing market could be taking a breather after a torrid pace of acceleration this year.
An index of homebuilder confidence from the National Assn. of Homebuilders remained unchanged at a level of 58 after posting four consecutive months of improvement. Any reading above 50 signals a majority of builders surveyed by the group expressed confidence in the market for newly constructed homes.
“While builder confidence is holding at the highest level in nearly eight years, many are reporting some hesitancy on the part of buyers due to the sharp increase in interest rates,” Rick Judson, chairman of the group, said in a news release. “Home buyers are adjusting to the fact that, while mortgage rates are still quite favorable on a historic basis, the record lows are probably a thing of the past.”
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Builders were uncertain about future sales with the component judging expectations in the next six months declining three points to 65. The component gauging traffic of potential buyers through model homes ticked up one point, to 47, while the component gauging current sales remained unchanged at 62.
In a blog post written before the release Tuesday morning Jed Kolko, chief economist for real estate web site Trulia.com, argued that construction activity is lagging because vacancies remain high and household formation low.
“Young adults, who are key to household formation, are still out of work and living with their parents,” Kolko wrote. “With today’s elevated vacancy rates and slow household formation, construction activity won’t return to normal quickly.”
Also on Tuesday, the real estate website Redfin released a report that said prices, sales and the number of homes for sale saw declines from July to August. The company tracks 19 U.S. markets including the Los Angeles area.
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