The National Association of Home Builders (NAHB)/Wells Fargo housing market index for October slipped two points to 63. The reading met the consensus forecast of 63 from a Bloomberg survey of economists. The September reading was the highest since last October.
An index reading above 50 indicates that more builders view sales conditions as good than view them as poor. NAHB chairman Ed Brady noted that builders in many markets are worried about shortages of building lots and labor.
The current sales conditions sub-index for October fell from 71 to 69, and the sub-index that estimates prospective buyer traffic slipped one point, from 47 to 46. The sub-index measuring sales expectations for the next six months rose from 71 to 72.
The NAHB’s chief economist said:
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. Moreover, mortgage rates remain low and the HMI index measuring future sales expectations has been over 70 for the past two months. These factors will sustain continued growth in the single-family market in the months ahead.
The three-month moving average index rose in three of the four NAHB regions. In the West, the index rose two points to 75, and one point to 65 in the South, one point to 43 in the Northeast and one point in the Midwest with a score of 56.
The U.S. Census Bureau releases its report on September housing starts and home building permits on Wednesday morning. Economists are expecting a rise in new housing starts from 1.142 million in August to 1.18 million in September. New building permits are forecast to rise from 1.139 to 1.165 million. Both estimates are seasonally adjusted annual rates (SAAR).
The NAHB/Wells Fargo housing market index has remained in the 60-point range since June of last year. Prior to mid-2013, the index had not risen to 50 since mid-2006.