Confidence Among U.S. Homebuilders Little Changed in Aprilby
Better buyer traffic, outlook offset decrease in current sales
Economist optimistic mortgage rates, jobs will boost demand
Confidence among U.S. homebuilders was little changed in April, indicating the housing market lacked momentum as the spring selling season got under way.
The National Association of Home Builders/Wells Fargo builder sentiment gauge held at 58 this month, where its been since February, figures from the Washington-based group showed Monday. Readings greater than 50 mean more respondents report good market conditions.
Better buyer traffic and growing optimism about the outlook for the next six months made up for a drop in current sales of single-family homes, the report showed, underscoring that demand is lackluster even as hiring strengthens and borrowing costs remain low. Faster growth in wages and a higher supply of homes within the reach of more Americans would go far in ushering a stronger rebound in residential real estate.
“The single-family housing sector continues to recover at a slow but consistent pace,” NAHB Chairman Ed Brady, a homebuilder from Bloomington, Illinois, said in a statement. “As we enter the spring home buying season, we should see the market move forward.”
The median forecast in a Bloomberg survey of 43 economists called for 59. Estimates ranged from 57 to 60. The prior month’s reading was unrevised. The index reached a 10-year high of 65 in October.
The group’s gauge of prospective buyer traffic climbed to 44 from 43 the prior month, while the index of current sales of single-family home decreased to 63 from 65.
The measure of the six-month sales outlook improved to 62 from 61.
Builder confidence fell in the Northeast and Midwest and was little changed in the South and West.
“Builders remain cautiously optimistic about construction growth in 2016,” NAHB Chief Economist Robert Dietz said in a statement. “Solid job creation and low mortgage interest rates will sustain continued gains in the single-family housing market in the months ahead.”
The job market is underpinning consumer purchases of homes and automobiles. The March employment report showed employers added 215,000 workers to payrolls after a 245,000 February advance. The jobless rate, which edged up to 5 percent as more people entered the labor force, is hovering near an eight-year low. At the same time, worker pay is yet to accelerate.
Borrowing costs remain historically low. The average rate for a 30-year fixed mortgage was 3.58 percent last week, the lowest since May 2013 and down from 6.63 percent in July of 2008, according to data from Freddie Mac.
Federal Reserve policy makers, who lifted interest rates in December for the first time since 2006, have signaled further moves will be only gradual.
A Commerce Department report due Tuesday may show a mixed picture on residential construction activity. Housing starts probably cooled in March while permits, a sign of future construction, climbed for the first time in four months, according to the median forecast in a Bloomberg survey.