Optimism among US homebuilders weakens

The latest reading marks the second decline in a row for the index, which reached the highest level in 11 years in December. The February number also fell shy of analyst predictions. They expected the index to hit 68, according to FactSet.

Builders’ view of sales now and over the next six months also fell, as did a gauge of traffic by prospective buyers.

Sales of new U.S. homes climbed to 563,000 last year, an increase of 12.2 per cent from 2015. Low mortgage rates and a steadily improving job market drove much of the growth. But sales slowed in December following a jump in mortgage rates the previous month. January sales figures are due out next week.

The average rate on 30-year fixed-rate loans was 4.17 per cent last week, down from 4.19 per cent the previous week, but sharply higher than the 3.65 per cent average for all of 2016, according to Freddie Mac.

Higher mortgage rates make home loans more expensive, which could dampen sales.

Despite the pullback in this month’s builder confidence index and the potential setback of higher mortgage rates, builders’ overall outlook remains positive, although the industry continues to grapple with a shortage of skilled construction workers and land parcels cleared for home construction.

“Despite these constraints, the overall housing market fundamentals remain strong and we expect to see continued growth this year as some of these concerns are addressed,” said Robert Dietz, the NAHB’s chief economist.

The homebuilder trade group forecasts that single-family home construction will climb 10 per cent this year.

This month’s builder index was based on 300 respondents.

A measure of current sales conditions for single-family homes dipped one point to 71, while a gauge of traffic by prospective buyers slid five points to 46. Builders’ view of sales over the next six months fell three points to 73.

Alex Veiga, The Associated Press

by Canadian Press

Optimism among US homebuilders weakens

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