Confidence among U.S. homebuilders dropped in February to a nine-month low as potential buyers stayed away, interrupting the steady progress residential real estate had built over the course of 2015.
The National Association of Home Builders/Wells Fargo builder sentiment index decreased to 58 in February from a revised reading of 61 the prior month, figures from the Washington-based group showed Tuesday. Readings greater than 50 mean more respondents reported good market conditions.
Stable employment gains, muted firings and a nascent acceleration in wages are helping support U.S. consumers considering a home purchase, even as fears build around a potential global recession. Borrowing costs have so far remained close to record lows even after Federal Reserve officials raised the benchmark interest rate in December.
“Builders are reflecting consumers’ concerns about recent negative economic trends,” David Crowe, NAHB chief economist, said in a statement. “Historically low mortgage rates, steady job gains, improved household formations and significant pent-up demand all point to a gradual upward trend for housing in the year ahead.”
The median forecast in a Bloomberg survey of 48 economists called for a February reading of 60. Estimates ranged from 57 to 62. The gauge reached a 10-year high of 65 in October.
The group’s gauge of buyer traffic dropped to 39 in February, the lowest since May, from 44 the prior month. The index of current single-family home sales decreased to 65 from 68.
The measure of the six-month outlook bucked the trend, increasing to 65 from 64 in January.
Builder confidence this month declined in all four U.S. regions. Sentiment among builders in the South was the weakest since March.
Unemployment at an eight-year low of 4.9 percent in January, coupled with faster wage growth, should help keep a floor under construction demand this year. Hourly earnings rose more than estimated last month after climbing in the year to December by the most since July 2009.
Favorable borrowing rates continue to cushion home buyers who are able to meet credit standards. The average 30-year, fixed mortgage was 3.65 percent in the week ended Feb. 11, the cheapest since April and close to the record-low 3.31 percent reached in 2012, according to Freddie Mac figures dating to 1971.
© Copyright 2023 Bloomberg News. All rights reserved.