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Builder Confidence Slips but Still Positive

Published by: Betty on 27th Oct 2014 | View all blogs by Betty
Builder Confidence Slips but Still Positive
 
While a string of recent reports on the US housing sector have prompted growing confidence in homeowners and many economists, the nation's homebuilders have apparently not been convinced, according to the latest reading on builder sentiment issued by the National Association of Home Builders.  The group's index of builder confidence fell five points this month to a reading of 54.  Despite the decline, however, any reading over 50 means that more builders see conditions as positive than negative.  In September, the index reached 59, its highest level since November 2005, well before the recession that saw confidence in the housing sector plummet by nearly every measure.  October's decline was particularly disappointing because economists in a recent Reuters poll projected the index would remain at September's level.
 
October marked the first time the NAHB's gauge of builder sentiment declined since May.  A number of economists noted, however, that the housing market should continue to improve considering a series of positive reports in recent weeks.  Mortgage rates are still quite low in historical terms, the national unemployment rate has reached its lowest level since the recession, and there's plenty of pent-up demand for new and existing homes as a variety of factors have caused many potential buyers to hold off over the last few years.  With prices leveling off, many on-the-fence buyers are beginning to shop around, and many economists are expecting a much busier winter season than what is typical.

 
According to the NAHB builder sentiment index for October, builder confidence waned in each oif the three major areas tracked by the gauge, as the reading declined in sentiment readings concerning current sales conditions, expected future sales activity and in buyer traffic.  The reading was unchanged from a year earlier, however, and is still well into positive territory at 54.  Economists brushed the report off, however, noting that the housing market is in a good place and will likely continue to improve despite the few negative reports that might come along.

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