Builder confidence is down this month as higher mortgage rates and Washington gridlock took their toll, according to data released Wednesday by the National Association of Home Builders.
Confidence in the market for new single-family homes dropped two points this month to a level of 55, according to the NAHB/Wells Fargo Housing Market Index. Builder confidence took a hit largely because of the recent budget brinksmanship in the nation’s capital, according to NAHB Chairman Rick Judson.
“Builder optimism remains above 50 and we are still seeing signs of pent-up demand in many markets across the country,” Judson said. “This slight dip in builder sentiment is the result of continuing challenges in the marketplace with regard to the cost and availability of labor and lots and uncertainty in Washington.”
NAHB Chief Economist David Crowe said the drop in builder optimism was temporary.
“A spike in mortgage interest rates along with the paralysis in Washington that led to the government shutdown and uncertainty regarding the nation’s debt limit have caused builders and consumers to take pause,” Crowe said. “However, interest rates remain near historic lows and we don’t expect the level of rates to have a major impact on sales and starts going forward. Once this government impasse is resolved, we expect builder and consumer optimism will bounce back.”