Tags: Confidence | Homebuilders | Houses | Realty

Confidence Among Homebuilders Declines to Three-Month Low

Thursday, 16 Oct 2014 03:35 PM

Confidence among U.S. homebuilders dropped in October to a three-month low, interrupting momentum as the industry approaches the quieter winter months.

The National Association of Home Builders/Wells Fargo builder sentiment gauge declined to 54 this month from 59 in September, figures from the Washington-based group showed. Readings greater than 50 mean more respondents report good market conditions. The median forecast in a Bloomberg survey called for no change.

“We are seeing a return to the mid-50s index level trend established earlier in the summer, which is in line with the gradual pace of the housing recovery,” NAHB Chairman Kevin Kelly, a homebuilder and developer from Wilmington, Delaware, said in a statement. “While there was a dip this month, builders are still positive about the housing market.”

Cheaper borrowing costs may help draw more prospective buyers into the market even as credit conditions remain tight more than five years after the recession. Further job market gains and a pickup in wages would help boost residential real estate, which has seen lackluster participation among first-time home buyers.

Estimates in a Bloomberg survey of 52 economists ranged from 56 to 61. The September reading was the highest in nine years.

The homebuilder group’s gauge of prospective buyer traffic dropped to 41 in October, while the index of current single- family home sales decreased to 57.

The measure of the six-month sales outlook fell to 64 in October from 67.

U.S. Regions

Builder confidence decreased in all four U.S. regions. Sentiment slumped 8 points in the Midwest and 7 points in the West.

The average 30-year, fixed-rate mortgage was at 4.12 percent in the week ended Oct. 9, close to the 4.1 percent rate last reached in September that was the cheapest in almost a year.

Lenders, including San Francisco-based Wells Fargo & Co., are tempering their outlook for an industry that hasn’t completely healed from the downturn.

“While the residential real estate market has definitely gotten better, which is good for the U.S. economy, it has not fully recovered,” Chief Executive Officer John Stumpf said on an Oct. 14 earnings call. “I believe there are several factors holding the housing market back from a complete recovery,” including slow household formation, elevated student debt levels, weak inventories and still-tight credit, he said.

A report Friday is projected to show housing starts rose in September after their third drop in four months. Builders broke ground at a 1 million annualized pace in last month, up from a 956,000 rate in August, according to the median forecast of economists surveyed before figures from the Commerce Department. Starts averaged a 930,000 pace last year.


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Economy
Confidence among U.S. homebuilders dropped in October to a three-month low, interrupting momentum as the industry approaches the quieter winter months.
Confidence, Homebuilders, Houses, Realty
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2014-35-16
Thursday, 16 Oct 2014 03:35 PM
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