Confidence among U.S. homebuilders fell more than forecast in October to a four-month low as rising interest rates and the budget battle in Washington stifled progress in the housing market.
The National Association of Home Builders/Wells Fargo index of builder sentiment decreased to 55 this month from a revised 57 in September that was weaker than initially estimated, the Washington-based group reported today. The median forecast in a Bloomberg survey called for a decline to 57. Readings above 50 mean more builders view conditions as good than poor.
The figures show a partial closing of the federal government that began Oct. 1 and a political showdown over raising the nation’s $16.7 trillion borrowing limit are taking a toll on sentiment and delaying spending decisions. Mortgage rates close to a two-year high are also slowing gains in real estate, which has been a source of strength for the economy.
“A spike in mortgage interest rates along with the paralysis in Washington that led to the government shutdown and uncertainty regarding the nation’s debt limit have caused builders and consumers to take a pause,” David Crowe, chief economist at the builders association, said in a statement. “Once this government impasse is resolved, we expect builder and consumer optimism will bounce back.”
Estimates in a Bloomberg survey of 48 economists for the homebuilder index ranged from 54 to 60 after a previously reported September reading of 58. Read more >>