Sentiment drops for third straight month
The numbers: The National Association of Home Builders’ monthly confidence index fell 4 points to 40 in October, the U.S. trade group said on Tuesday.This is the third straight drop in the index, which is low at its lowest level since January. A year ago, the index was 38 but it had improved to 56 in July.
Key details: All three gauges that underpin the overall builder-confidence index fell. The gauge that marks current sales conditions fell by 4 points. The component that measures prospective-buyer traffic fell by 4 points. The gauge that assesses sales expectations for the next six months fell by 5 points.Big picture: The rise in mortgage rates above 7% has triggered a sharp reversal in homebuilder sentiment, economists said.
What NAHB said: “Builders have reported lower levels of buyer traffic, as some buyers, particularly younger ones, are priced out of the market because of higher interest rates,” said Alicia Huey, chair of the NAHB Chairman Alicia Huey, a custom home builder from Birmingham, Ala. “Higher rates are also increasing the cost and availability of builder development and construction loans, which harms supply and contributes to lower housing affordability.
Market reaction: Stocks DJIA SPX were trading lower in early morning trading while the 10-year Treasury note yield BX:TMUBMUSD10Y rose 14 basis points to 4.85%. The SPDR S&P Homebuilders exchange-traded fund XHB was trading higher prior to the release of the data.
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