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Wednesday, October 16, 2013

Homebuilder Sentiment Declines Amidst Political Turmoil

Building confidence fell two points in October to 55, according to the NAHB. While optimism remains above 50, pent-up demand still exists across the country. The increased mortgage rates along with the economic uncertainty stemming from Washington caused builders and buyers to become more hesitant. The decrease in homebuilder sentiment is a concrete example of the economic toll the shutdown and possible debt ceiling breach causes.

The details of the report were not promising either, as all three components dropped 2 points. The component gauging current sales conditions, sales expectations in the next six months and traffic of prospective buyers declined to 58, 62 and 44 respectively.

Due to the lack of government data released during the shutdown, NAHB offered their own housing starts estimates. NAHB reports that housing starts will be between 875,000 and 900,000 units in September, on par with gains from the previous month. Furthermore, the seasonally adjusted annual rate of construction for single-family homes was between 620,000 and 630,000 units in September. The pace of construction of multifamily units was an additional 255,000 to 270,000. The Fed meeting in September also offered additional relief that interest rates would remain low in the near future.

Read the NAHB release.

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