Uncertainties in the market are not causing issue with builder confidence, but also, not increasing it, the National Association of Home Builders’ (NAHB) index reveals. This same market uncertainty has been creating tensions with both builders and buyers for some time now, but recently has remained roughly the same. As of last month, the trend was downwardly revised at a level of 54.
The recent government shutdown caused a lot of hesitation across the housing market, and increasing mortgage rates have been keeping many from buying. Those homebuilders who are still working through the unsure economic conditions are having difficulty with rising costs, but lowered appraisals but the report reveals they are still optimistic. In prior months, confidence levels amongst builders and buyers alike had dropped as fiscal woes loomed in the Washington.
Reuters’ chairman Rick Judson said of the current levels, “Given the current interest rate and pricing environment, consumers continue to show interest in purchasing new homes, but are holding back because Congress keeps pushing critical decisions on budget, tax and government spending issues down the road.”
According to NHB/Wells Fargo Housing Market Index, confidence came in at about 54 for November but in October dropped to 54, from 55. Those economists who were surveyed by Reuters predicted November would read 55, so, the confidence level of 58 is an improvement upon those predictions. Across the nation, confidence levels differed. Though in the South and in the West, confidence levels remained unchanged, in the Northeast, it actually rose. The Midwest showed a reduction in confidence.
NAHB chief economist David Crowe stated that, “Policy and economic uncertainty is undermining consumer confidence. The fact that builder confidence remains above 50 is an encouraging sign, considering the unresolved debt and federal budget issues cause builders and consumers to remain on the sideline.”
In August, mortgage rates held an increase not seen in two years in spite of fears that the Fed may reduce purchases of mortgage backed securities and Treasuries in September. This, combined with the labor market again showing some signs of improvement seemed to help. The US Central Bank officials did not taper the bond purchase stimulus, and have indicated this may not even occur until at least later in 2014.
However, expectations for single family home sales have fallen for the third month in a row, down further to 60, from 61 in October. Prospective buyer predictions have fallen as well, to 42- the lowest seen since June, though the original reading reported it at 44.