Builder confidence of the strength of the single-family housing market fell two points in October due to higher mortgage rates and the fiscal gridlock, according to the National Association of Home Builders (NAHB). The NAHB-Wells Fargo Housing Market Index (HMI) surveys NAHB members to rate market conditions for the sale of new homes at the present time and in the next six months, as well as the traffic of prospective buyers of new homes. The HMI measures the current sales conditions for new single-family homes, the measure of sales expectations for the next six months, and the gauge of traffic of prospective buyers, all of which dropped throughout the month of October.
The HMI fell to 55 points from a revised reading of 57 in September, a figure still well above last October’s reading of 41. The only region the index rose nationwide was in the Midwest, which now stands at 65 points. Any number over 50 indicates that more builders view conditions as good vs. poor.
“A spike in mortgage interest rates along with the paralysis in Washington that led to the government shutdown and uncertainty regarding the nation’s debt limit have caused builders and consumers to take pause,” said David Crowe, chief economist of the NAHB. “Once this government impasse is resolved, we expect builder and consumer optimism will bounce back.”
