Home­builder sen­ti­ment rises in Septem­ber as sales im­prove

Daily Local News (West Chester, PA) - - MARKETPLACE - By Alex Veiga AP Busi­ness Writer

Con­fi­dence among U.S. home­builders has surged to the high­est level in nearly a year, re­flect­ing a brighter out­look for sales now and into 2017.

The Na­tional As­so­ci­a­tion of Home Builders/ Wells Fargo builder sen­ti­ment in­dex re­leased Monday climbed six points this month to 65 fol­low­ing a down­wardly re­vised read­ing of 59 in Au­gust.

Read­ings above 50 in­di­cate more builders view sales con­di­tions as good rather than poor. The in­dex has been mostly at 58 since ris­ing to 61 in Jan­uary. The last time it reached 65 was Oc­to­ber last year.

The lat­est in­dex beat an­a­lysts’ ex­pec­ta­tions, which called for a read­ing of 60, ac­cord­ing to Fact Set.

Builders’ view of cur­rent sales and a gauge of traf­fic by prospec­tive buy­ers rose. Their out­look for sales over the next six months also in­creased.

A strength­en­ing job mar­ket and mort­gage rates hov­er­ing near all-time lows have helped stoke de­mand for home­own­er­ship, push­ing up sales of new and pre­vi­ously oc­cu­pied homes. That, in turn, has been good news for home­builders.

“With the in­ven­tory of new and ex­ist­ing homes re­main­ing tight, builders are con­fi­dent that if they can build more homes they can sell them,” said Robert Di­etz, the NAHB’s chief econ­o­mist.

New home sales ac­cel­er­ated 12.4 per­cent in July to a sea­son­ally ad­justed rate of 654,000 an­nual units, the strong­est level since Oc­to­ber 2007. Sales in July roughly matched the long-stand­ing pace of 650,000 new homes sell­ing each year.

Mean­while, av­er­age longterm mort­gage rates re­main near their all-time low of 3.31 per­cent set Novem­ber 2012. The av­er­age for the 30-year fixed-rate mort­gage rose last week to 3.5 per­cent, the high­est level since June, ac­cord­ing to mort­gage giant Fred­die Mac.

Still, builders con­tinue to face grow­ing com­pe­ti­tion for work­ers and real es­tate.

“Though solid job cre­ation and low in­ter­est rates are also fu­el­ing de­mand, builders con­tinue to be ham­pered by sup­ply-side con­straints that in­clude short­ages of la­bor and lots,” Di­etz noted.

This month’s builder in­dex was based on 334 re­spon­dents.

A mea­sure of cur­rent sales con­di­tions for sin­gle­fam­ily homes jumped six points to 71, while builders’ view of sales over the next six months in­creased five points to 71. A gauge of traf­fic by prospec­tive buy­ers rose four points to 48.

On a re­gional ba­sis, the in­dex found builder sen­ti­ment im­proved in the North­east, Sout­hand West. The Mid­west held steady.

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.

THE AS­SO­CI­ATED PRESS

Town homes stand un­der con­struc­tion Feb. 17 as a pedes­trian walks along the BeltLine in At­lanta.

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