U.S. homebuilders are feeling slightly less confident in their sales prospects heading into next year, even as their overall sales outlook remains favourable.
The National Association of Home Builders/Wells Fargo builder sentiment index released Tuesday slipped this month to 62, down three points from a revised reading of 65 in October.
Readings above 50 indicate more builders view sales conditions as good, rather than poor. The index has been consistently above 50 since July last year.
Builders’ view of current sales conditions and their outlook for sales over the next six months also declined. A measure of traffic by prospective buyers rose slightly.
The latest builder index represents a pullback from October’s reading, which hit the highest level in 10 years, and is more in line with the consistent, modest growth in new home sales seen this year, said David Crowe, the NAHB’s chief economist.
“A firming economy, continued job creation and affordable mortgage rates should keep housing on an upward trajectory as we approach 2016,” Crowe said.
Solid hiring over the past three years has improved many family balance sheets, while rising home prices has returned equity to current homeowners now seeking to upgrade to new residential developments. Sales of new homes have soared 17.6 per cent during the first nine months of 2015.
Still, new-home sales plunged sharply in September to a seasonally adjusted annual rate of 468,000, the slowest pace in 10 months. The decline snapped a two-month streak of accelerating sales.
Sales of new homes remain below the 52-year historic average of 655,200.
This month’s builder index was based on 364 respondents.
Builders’ view of current sales conditions for single-family homes fell three points to 67. Builders’ outlook for sales over the next six months slid five points to 70. A measure of traffic by prospective buyers rose one point to 48.
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.