"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."
Builder confidence in the market for new construction single-family homes held steady in November from a downwardly revised level of 54, according to real estate market trends tracked by the National Association of Home Builders/Wells Fargo Housing Market Index released Monday.
Derived from a monthly survey that NAHB has been conducting for 25 years, the Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair,” or “poor.” The real estate market trends survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average,” or “low to very low.” Scores from each component are used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view market conditions as good than poor.
The November index reading of 54 marks the six consecutive months that builders view these real estate market trends as more positive than negative. Two of the index’s three real estate market trends components dropped, while one remained flat. The future sales expectations component dropped one point to 60 while the component gauging prospective buyer traffic dropped one point to 42. The index that gauges current sales conditions remained at 58.
“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," NAHB Chairman Rick Judson said in a statement.
That the November index is above 50 is “an encouraging sign,” added NAHB Chief Economist David Crowe, “considering the unresolved debt and federal budget issues cause builders and consumers to remain on the sideline.”
Last week, the NAHB reported that builder confidence among baby boomer home buyers improved in the third quarter compared to the same period one year ago. All segments of the 55+ housing market, including single-family homes, condominiums and multifamily rental—registered “strong” increases, the NAHB reported. The single-family index increased 14 points to a level of 50, which is the highest third-quarter number since the inception of the index in 2008 and the eighth consecutive quarter of year over year improvements.
“The positive year over year increase in confidence by builders for the 55+ market is tracking right along with other segments of the home building industry,” Crowe said. “And like other segments of the industry, the 55+ market is improving in part because consumers are more likely to be able to sell their current homes, which allows them to buy a new home or move into an apartment that suits their specific needs.”
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.