Homebuilder confidence is staying steady in September, according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index report released today.
After clocking in at a revised recovery high of 58 points for August, September's 58 reading keeps confidence at its highest point since 2006. Analysts were slightly disappointed, having expected a steady Index from August's unrevised 59 reading.
Any number over 50 indicates that more builders view sales conditions as good than poor, a point reached for the first time in June since April 2006. The survey looks at builder confidence in newly built single-family homes.
Builder confidence has been climbing steadily since the fall of 2011, gaining momentum in concert with the housing recovery. A year ago, the index was at 40. The last time the reading was above 58 was in November 2005, when it was 61. U.S. sales of new homes peaked in July that year.
But not all the news points to steady growth ahead. "While builder confidence is holding at the highest level in nearly eight years, many are reporting some hesitancy on the part of buyers due to the sharp increase in interest rates," said NAHB Chairman Rick Judson in a statement today. "Home buyers are adjusting to the fact that, while mortgage rates are still quite favorable on a historic basis, the record lows are probably a thing of the past."
The average rate on a 30-year fixed mortgage was 4.57% last week, according to Freddie Mac. Mortgage rates have risen more than a full percentage point since May.
Digging deeper into components, current sales conditions stayed steady at 62 points, prospective buyer traffic increased 1 point to 47, and future sales expectations for the next six months fell 3 points to a more modest 65 reading.
NAHB Chief Economist David Crowe also noted a hesitancy on the part of consumers:
Following a solid run up in builder confidence over the past year, we are seeing a pause in the momentum as consumers wait to see where interest rates settle and as the headwinds of tight credit, shrinking supplies of lots for development and increasing labor costs continue.
-- Material from The Associated Press was used in this report. link