While the real estate market is still well below its glory days of the housing bubble, confidence among home builders in the United States continues to remain near multiyear highs.
After climbing higher for four consecutive months, the National Association of Home Builders/Wells Fargo’s index of builder confidence was unchanged in September, holding at 58. Confidence is now at its best level since November 2005, bringing back memories of the housing boom.
The reading was in line with estimates. Any reading above 50 indicates that more builders view sales conditions as good rather than poor. In the five years before the Great Recession, the index averaged 54, and hit an all-time low of 8 in early 2009.
“While builder confidence is holding at the highest level in nearly eight years, many are reporting some hesitancy on the part of buyers due to the sharp increase in interest rates,” said NAHB Chairman Rick Judson, a home builder from Charlotte, N.C. “Home buyers are adjusting to the fact that, while mortgage rates are still quite favorable on a historic basis, the record lows are probably a thing of the past.”
Between the beginning of May and the end of June, the average interest rate for a 30-year fixed-rate mortgage surged from 3.59 percent to 4.68 percent, according to the Mortgage Bankers Association. The most recent report from the organization said the average rate on a 30-year fixed-rate mortgage was 4.8 percent — its highest reading since April 2011.
The NAHB/Wells Fargo Housing Market Index gauges builder perceptions in three areas of the real estate market. The reading for current sales conditions was unchanged at 62, but sales expectations for the next six months fell 3 points to 65. The component gauging buyer traffic edged slightly higher to 47.
The three-month moving averages for regional housing market index scores increased across the nation. The South and Northeast both increased 2 points to 56 and 41, respectively. Meanwhile, the Midwest and West jumped 4 points to 64 and 61, respectively.
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