A gauge of home-builder sentiment fell in October, the latest in
a string of mixed signals for the U.S. housing recovery.
An index of builder confidence in the market for new
single-family homes declined by five points to a seasonally
adjusted level of 54 in October, the National Association of Home
Builders said Thursday. A reading over 50 means most builders
generally see positive conditions.
The index jumped in September to 59, its highest level since
November 2005. Economists surveyed by The Wall Street Journal
expected the index would remain at that level in October.
October marked the index's first decline since May, though it
remained above the 50-point threshold for a fourth consecutive
month. "Historically low mortgage interest rates, steady job gains
and significant pent-up demand all point to continued growth of the
housing market," said David Crowe, the trade group's chief
economist.
U.S. home builders this month grew less confident about current
sales conditions, expected future sales and traffic from
prospective buyers. The index fell from September in all four
regions of the country.
After a streak of strong growth in 2012 and the first half of
2013, the U.S. housing sector has hit turbulence over the last
year, in part due to a jump last summer in mortgage rates. The
Federal Reserve, in a policy statement last month, reiterated its
concern about the "slow" housing recovery.
Sales of previously owned homes were down 5.3% in August from a
year earlier, according to the National Association of Realtors.
Sales of newly built homes, which make up roughly 10% of the
market, were up 2% in the first eight months of 2014 compared with
the same period a year earlier, the Commerce Department said.
Growth in construction of multifamily housing, such as apartment
buildings, has outpaced construction of traditional single-family
homes. Overall housing starts rose 8.6% in the first eight months
of the year compared with 2013. But new construction on
single-family homes rose just 3.1%, and building permits for
single-family homes were flat from a year earlier, according to
Commerce Department data.
Miami-based builder Lennar Corp. last month reported a boost in
quarterly profits, aided by the sale of two apartment properties.
"These sales demonstrate the earnings potential of a maturing
business," Chief Executive Stuart Miller told analysts.
Still, Barclays analysts this week lowered their forecast for
starts in 2015, "as we doubt that the dysfunction in the housing
market will be resolved quickly enough to allow more than a 10%
increase in sales volume next year," they wrote in a report.
The NAHB index released Thursday only gauges home-builder
confidence in the single-family market.
Write to Ben Leubsdorf at ben.leubsdorf@wsj.com
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