New York, NY, United States (4E) – Homebuilder confidence in the U.S. dropped to a four-month low in October as the housing market felt the impact of rising interest rates and the standstill in Washington over the budget.
The housing-market index of the National Association of Home Builders/Wells Fargo dropped to 55 in October from the previous month’s reading of 57. A previous estimate in September predicted a reading of 58, matching the highest reading since 2005.
Analysts’ median forecast called for a decline to 57 according to a survey by Bloomberg News. A level above 50 indicates that builders are generally optimistic about sales trends.
The result also shows that the partial shutdown of the federal government that started on Oct. 1 and a political battle over raising the country’s $16.7tn debt ceiling are hurting sentiment and delaying spending plans. Gains in real estate — a source of strength for the economy — are also slowed down by high mortgage rates, which are currently at a two-year high.
Builder optimism eased in three of the four regions in the U.S., with firms in the Northeast posting the biggest decline. The gauge for the region fell to 31, the lowest level since April. Confidence also slowed in the West and South regions.