Homebuilder sentiment improves in August
WASHINGTON – U.S. homebuilders grew slightly more optimistic about the housing market in August, putting their confidence at levels last seen a decade ago during the debt-fueled housing boom.
The National Association of Home Builders/Wells Fargo builder sentiment index released Monday rose this month to 61, the highest level since November 2005. The reading was 60 in both June and July. Any reading above 50 indicates more builders view sales conditions as good, rather than poor.
“The fact the builder confidence has been in the low 60s for three straight months shows that single-family housing is making slow but steady progress,” said Tom Woods, a Missouri-based builder and chairman of the National Association of Home Builders.
The combination of stable job gains and low mortgage rates bolstered sales of new homes this year. But unlike a decade ago, sentiment improved without the same dramatic increases in mortgage debt ultimately led housing prices to crash and threw the economy into a steep recession. Outstanding mortgage debt nationwide fell 0.7 percent in the April-June quarter to $8.12 trillion, putting it at roughly the same level as three years ago when the housing market bottomed, the Federal Reserve Bank of New York reported last week.
Builders’ view of current sales conditions and buyer traffic improved in August, while sales prospects over the next six months were stable. Still, builders said they are finding it difficult to buy land and hire construction crews.
Through the first half of 2015, the government reported that new-home purchases shot up 21.2 percent to 274,000.
This comes as employers added 2.9 million workers over the past year and the unemployment rate dropped to 5.3 percent from 6.2 percent. The hiring infused the economy with new paychecks that supported the spending on housing and autos, among other expenses.
And average mortgage rates remain under 4 percent, putting them about two percentage points below this historical average.
Mortgage giant Freddie Mac said the average rate on a 30-year fixed-rate mortgage was 3.94 percent last week.