US homebuilder sentiment slips in July
U.S. homebuilders are feeling slightly less optimistic about their sales prospects this month, though their outlook for the new-home market remains positive overall.
The National Association of Home Builders/Wells Fargo builder sentiment index released Monday fell one point to 59.
Readings above 50 indicate more builders view sales conditions as good, rather than poor. The index had mostly held at 58 this year before rising to 60 last month.
Builders’ view of current sales and traffic by prospective buyers slipped one point this month. Their outlook for sales over the next six months slid three points.
The latest survey of builders follows a recent pullback in sales of new U.S. homes.
Sales declined 6 percent in May to a seasonally adjusted annual rate of 551,000 homes. Overall, though, sales are running ahead of last year’s pace through the first five months of this year, aided by job growth and ultra-low mortgage rates.
The average 30-year fixed-rate mortgage ticked up 3.42 percent last week, staying close to its all-time low of 3.31 percent in November 2012. A year ago, the average rate was 4.09 percent.
While new-home sales have rebounded from the depths of the housing bust, the current rate of new home sales lags behind the historical annual average of roughly 650,000 homes. New home sales figures for June are due out next week.
Many builders also continue to grapple with a stubborn dearth of skilled workers and available land parcels cleared for new construction.
Still, the NAHB expects that new-home sales will continue to grow, albeit slowly.
“Job creation is solid, mortgage rates are at historic lows and household formations are rising,” said Robert Dietz, the NAHB’s chief economist. “These factors should help to bring more buyers into the market as the year progresses.”
This month’s builder index was based on 304 respondents.
A measure of current sales conditions for single-family homes slipped one point to 63, while a gauge of traffic by prospective buyers fell one point to 45. Builders’ view of sales over the next six months slid three points to 66.
On a regional basis, the index found builder sentiment held steady in the Northeast, Midwest and South, but ticked up one point in the West.
Though new homes represent only a fraction of the housing market, they have an outsized impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to NAHB data.