The US Housing Market Index rose by four points to reach a reading of 80 in October as builders were encouraged by continued buyer enthusiasm despite record high home prices keeping some off the market, the National Association of Home Builders said on Monday
WASHINGTON (Pakistan Point News / Sputnik - 18th October, 2021) The US Housing Market Index rose by four points to reach a reading of 80 in October as builders were encouraged by continued buyer enthusiasm despite record high home prices keeping some off the market, the National Association of Home Builders said on Monday.
"Strong consumer demand helped push builder confidence higher in October despite growing affordability challenges stemming from rising material prices and shortages," the realtors association said in a news release.
Derived from a monthly survey that the association has been conducting for 35 years, the index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor."
The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
All three major HMI indices posted gains in October, the association said. The index gauging current sales conditions rose five points to 87, the component measuring sales expectations in the next six months posted a three-point gain to 84 and the gauge charting traffic of prospective buyers moved four points higher to 65. The overall reading was at 80.
Notwithstanding the improved builder sentiment, the association voiced concerns about bottlenecks in the home delivery system. "Although demand and home sales remain strong, builders continue to grapple with ongoing supply chain disruptions and labor shortages that are delaying completion times and putting upward pressure on building material and home prices," Chuck Fowke, chairman of the association, said.
The Federal Reserve's plans to roll back its long-running stimulus for the US economy could heighten pressure on the market, said Robert Dietz, chief economist at the association. "Building material price increases and bottlenecks persist and interest rates are expected to rise in coming months as the Fed begins to taper its purchase of US Treasuries and mortgage-backed debt."
New home sales rose 1.5% to a seasonally adjusted annual rate of 740,000 units in September.
Pending home sales rose 1.4% in August, after shrinking by 1.8% in July, according to the realtors' index which measures signings on existing home purchases that have yet to be concluded. Year-on-year, the growth was a lot more pronounced, surging 8.1%.
Dire housing shortages in the United States since the financial crisis of 2007/2008 and last year's coronavirus outbreak have sent home prices to record highs.
