The upheaval in Washington has affected the confidence of many builders in the market for new homes, a new NAHB survey says.
Builder confidence in the market for newly constructed single-family homes dropped two points in October to 55 on a 100-point scale, the National Association of Home Builders/Wells Fargo Housing Market Index said.
"Builder optimism remains above 50 and we are still seeing signs of pent-up demand in many markets across the country," said NAHB Chairman Rick Judson, a home builder from Charlotte, N.C. "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."
NAHB Chief Economist David Crowe said it is likely more of a “pause” than signs of a permanent shift.
"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," Crowe said. "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."
The survey asks builders to rate sales and expectations for the next six months as “good,” “fair” or “poor.” The survey also asks about prospective buyer traffic. Any index number above 50 says most builders view conditions as positive.