Homebuilder confidence in the U.S. remained firm in the month of September, according to a report released by the National Association of Home Builders on Tuesday.
The report said the NAHB/Wells Fargo Housing Market Index came in at 67 in September, unchanged from August. Economists had expected the index to edge down to 66.
"Despite rising affordability concerns, builders continue to report firm demand for housing, especially as millennials and other newcomers enter the market," said NAHB Chairman Randy Noel.
He added, "The recent decline in lumber prices from record-high levels earlier this summer is also welcome relief, although builders still need to manage construction costs to keep homes competitively priced."
The NAHB said the component gauging expectations in the next six months rose to 74 in September from 72 in August, while the index measuring current sales conditions inched up to 74 from 73. The metric charting buyer traffic held steady at 49.
"A growing economy and rising incomes combined with increasing household formations should boost demand for new single-family homes moving forward," said NAHB Chief Economist Robert Dietz.
He added, "However, housing affordability is becoming a challenge, as builders face overly burdensome regulations and rising material costs exacerbated by an escalating trade skirmish. Interest rates are also forecasted to keep rising."
On Wednesday, the Commerce Department is scheduled to release a separate report on new residential construction in the month of August.
Housing starts are expected to jump to an annual rate of 1.235 million in August after rising to a rate of 1.168 million in July.
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