U.S. homebuilders are feeling slightly less confident about their sales prospects in coming months, though they remain positive overall that the housing market will continue to improve next year.
The National Association of Home Builders/Wells Fargo builder sentiment index released Tuesday slipped to 61 this month, down one point from a reading of 62 in November.
Readings above 50 indicate more builders view sales conditions as good, rather than poor. The index has been consistently above 60 since June.
Builders’ view of current sales conditions and their outlook for sales over the next six months declined. A measure of traffic by prospective buyers also fell slightly.
While a retreat from last month’s reading, the latest builder index is in line with a gradual, consistent housing recovery, said David Crowe, the NAHB’s chief economist.
“With job creation, economic growth and growing household formations, we anticipate the housing market to continue to pick up traction as we head into 2016,” Crowe said.
Americans recovered much of their appetite for owning new homes this year. Purchases surged 15.7 per cent through the first 10 months of the year, benefiting from the solid hiring gains and low mortgage rates.
Even so, the U.S. housing market is still healing from the bursting of the housing bubble and the 2008 financial crisis.
New home sales hit a seasonally adjusted annual pace of 495,000 in October, ahead of the 437,000 new homes sold in all of last year. Still, sales of new homes remain below the 52-year historic average of 655,200. New home sales data for November are due out next week.
Homebuilders remain concerned about the price and availability of construction labour and ready-to-build land parcels.
This month’s builder index was based on 341 respondents.
Builders’ view of current sales conditions for single-family homes dipped one point to 66. Builders’ outlook for sales over the next six months slid two points to 67. A measure of traffic by prospective buyers fell two points to 46.
Though new homes represent only a fraction of the housing market, they have an outsize 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.