Mamta Badkar in New York – Financial Times
US homebuilder confidence unexpectedly fell for the first time this year in June due to concerns over trade and rising construction costs.
The National Association of Home Builders on Monday said its housing market index fell to 64 in June from 66 the previous month. Economists had forecast a rise to 67, according to a survey by Thomson Reuters.
“While demand for single-family homes remains sound, builders continue to report rising development and construction costs, with some additional concerns over trade issues,” said NAHB chairman Greg Ugalde.
Lower mortgage rates have helped support housing activity this year. The average rate on a 30-year, fixed-rate mortgage was 3.82 per cent for the week ending June 13, according to the Mortgage Bankers Association. Rates climbed as high as 5.17 per cent in November.
Despite the lower rates, elevated home prices have posed a challenge to entry-level buyers.
“The sharp drop in mortgage rates while certainly helping, hasn’t been enough to offset years of 5-6% home price gains in enticing first-time buyers to buy instead of rent,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.
NAHB economist Robert Dietz said: “And while new home sales picked up in March and April, builders continue to grapple with excessive regulations, a shortage of lots and lack of skilled labour that are hurting affordability and depressing supply.”
The weaker homebuilder confidence data follows a report earlier this morning that showed manufacturing in the New York state area fell to its lowest level in 2016, adding to a recent draft of downbeat data that has prompted markets to raise bets that the Federal Reserve will cut interest rates this year. The central bank delivers its next policy decision on Wednesday.
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