U.S. Home-Builder Gauge Edges Lower in October

U.S. Home-Builder Gauge Edges Lower in October

U.S. home builders reported a slight drop in optimism in October but sentiment remained elevated, a sign the market for single-family homes should continue to be buoyed by steady demand.The National Association of Home Builders housing-market index fell two points from the prior month to a seasonally adjusted 63 in October, the trade group said Tuesday. That’s the second-highest level of the year, following a September reading of 65. A number over 50 indicates more builders view conditions as good than poor.The housing market has been boosted by steady job growth and historically low interest rates, but a shrinking pool of inventory has pushed up prices, putting homes outside the reach of some lower-income or first-time buyers.“The October reading represents a mild pullback from a jump in September, and indicates that the housing market continues to make slow and steady gains,” said NAHB chief economist Robert Dietz. He noted a gauge of future sales expectations has been above 70 for two months straight.Economists surveyed by The Wall Street Journal expected an October reading of 63. Last month’s reading of 65 was the highest since October 2015, when it also was 65. Previously, the gauge last reached that level in 2005.Builder confidence indicates a higher likelihood of new residential construction, which supports contracting and real estate jobs and underpins demand for materials. A pullback in fixed residential investment during the second quarter was a drag on overall U.S. growth. But while the demand for housing appears to be holding firm, NAHB chairman Ed Brady said builders continue to report shortages of lots and labor.Sales of newly built single-family homes, which account for only about 10% of the housing market, fell in August after hitting a multiyear high in July, according to the Commerce Department. Sales of previously owned homes, which account for the bulk of the market, fell in August for the second straight month as inventory remained tight and prices stayed high, according to the National Association of Realtors. Realtors fearing that high prices are stymieing homebuying are looking at builders to refresh the nation’s supply of available housing stock.Builders appear to be responding to the demand. In August, permits for single-family homes posted their largest gain in more than two years, even as the numb…

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