Even though builder confidence is currently at an eight-year peak with a mark of 58, there is some hesitancy from buyers due to the recent increases in interest rates, according to NAHB Chairman Rick Judson.
“Homebuyers 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,” Judson stated.
HMI component indexes were mixed in September. The index gauging current sales conditions stayed at 62, while sales expectations in the next six months declined three points to 65. Lastly, the index estimating traffic of prospective buyers increased one point from the prior month to 47.
Overall, any index number over 50 indicates that more builders view conditions as good rather than poor.
Additionally, all four regions posted gains in their three-month moving average HMI scores in September, including a two-point increase in the Northeast to 41, a four-point gain to 64 for the Midwest, up in the South two points to 56, and a mark of 61 in the West, a four-point uptick.
“We are seeing a pause in the momentum as consumers wait to see where interest rates settle and as the headwinds of tight credit, shrinking supplies of lots for development and increasing labor costs continue,” said David Crowe, chief economist for the National Association of Home Builders.