Builder confidence in the market for newly built, single-family homes fell two points in October to 55, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).
To calculate the HMI, the NAHB asks builders to rate sales, expected sales and buyer traffic as good, fair or poor. A number over 50 indicates that more builders view conditions as good than poor.
All of the HMI's three components each fell two points in October. The component gauging current sales conditions registered 58, while the component gauging sales expectations in the next six months posted a reading of 62 and the component gauging traffic of prospective buyers was 44.
"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 pause," said NAHB Chief Economist David Crowe in a statement. "However, interest rates remain near historic lows and we don't expect the level of rates to have a major impact on sales and starts going forward. Once this government impasse is resolved, we expect builder and consumer optimism will bounce back."
