U.S. homebuilder confidence stabilized in November after falling for two straight months, though steady home demand was tempered by worries about further fiscal battles in Washington, the National Association of Home Builders said on Monday.
Continue Reading Below
The NAHB/Wells Fargo Housing Market Index came in at 54 in November. The October figure was downwardly revised to 54 from the originally reported 55.
Economists polled by Reuters had predicted a November reading of 55.
"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," the Washington-based industry group's chairman Rick Judson said in a statement.
Home builders sentiment were also pressured by rising construction costs and low appraisals, Judson said.
Still, the index has held above 50 for a sixth straight month. Readings below 50 mean more builders view market conditions as poor than favorable.
Continue Reading Below
"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," NAHB Chief Economist David Crowe said in the same statement from the group.
Though tension over fiscal issues remains, the jump in mortgage rates this summer has been the main culprit behind the disruption in the housing recovery.
Mortgage rates climbed to two-year highs in August on fears the Federal Reserve might consider reducing its $85 billion monthly purchases of Treasuries and mortgage-backed securities in September as the labor market had shown signs of gaining traction earlier this year.
U.S. central bank officials decided against tapering its bond-purchase stimulus two months ago, and have since downplayed the chances of such a move until sometime in 2014.
"In short, the report still implies net improvement in sales relative to before mortgage rates started to rise in May, but activity has stalled in the last few months," Jim O'Sullivan, chief U.S. economist at High Frequency Economics wrote in a research note.
The survey's index on homebuilders' views on current sales conditions held steady for a second month at 58, the industry group said.
The gauge of expectations for single-family home sales for the next six months fell for a third straight month to 60 from a downwardly revised 61 in October, which was initially reported at 62.
The component on prospective buyer traffic dipped to 42, which was the lowest since June, from a downwardly revised 43 last month. The October reading was initially reported at 44.
On a regional basis, home builders in the Midwest reported the most severe deterioration in confidence. The reading on that region's sentiment fell to 54 points in November from 62 in October. The index's three-month average fell to 60 from 63.
The Northeast showed the biggest improvement in sentiment. The NAHB index for that region rose to 44 from an 11-month low of 30, lifting its three-month average to 39 from 38.
(Reporting by Richard Leong; Editing by Meredith Mazzilli)