Builders' confidence in the market for new single-family homes slipped as the National Association of Home Builders' housing market index — a monthly gauge of builder sentiment — dipped to 55 in October from a downwardly revised 56 in September, originally reported as 58.
Thomson Reuters' poll of economists predicted the index would be 57.
"Builder optimism remains above 50 and we are still seeing signs of pent-up demand in many markets across the country," according to NAHB Chairman Rick Judson. "This slight dip in builder sentiment is the result of continuing challenges in the marketplace with regard to the cost and availability of labor and lots and uncertainty in Washington."
"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 NAHB Chief Economist David Crowe. "However, interest rates remain near historic lows and we don't expect the level of rates to have a major impact on sales and starts going forward. Once this government impasse is resolved, we expect builder and consumer optimism will bounce back."
Derived from a monthly survey that NAHB has been conducting for 25 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as either "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as either "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.
The current single-family home sales index fell to 58 from 60, the sales expectations index for the next six months slid to 62 from 64; and the traffic of prospective buyers index declined to 44 from 46.