Reflecting growing affordability concerns, the National Association of Home Builders released a report on Monday showing a sharp drop in U.S. homebuilder confidence in the month of November.
The report said the NAHB/Wells Fargo Housing Market Index plunged to 60 in November after inching up by one point to 68 in October. Economists had expected the index to edge down to 67.
With the much bigger than expected decrease, the housing market index dropped to its lowest level since hitting 59 in August of 2016.
"Builders report that they continue to see signs of consumer demand for new homes but that customers are taking a pause due to concerns over rising interest rates and home prices," said NAHB Chief Economist Robert Dietz.
The much bigger than expected pullback by the index was partly due to a steep drop by the component gauging expectations in the next six months, which plummeted to 65 in November from 75 in October.
The component measuring current sales conditions also tumbled to 67 in November from 74 in October, while the metric charting buyer traffic registered an eight-point slump to 45 from 53.
"The decline of builder confidence should be noted by policymakers," Dietz said. "Recent statements on economic conditions have lacked commentary on housing, even as housing affordability has hit a 10-year low."
He added, "Given that housing leads the economy, policymakers need to focus more on residential market conditions."
On Tuesday, the Commerce Department is scheduled to release a separate report on new residential construction in the month of October.
Housing starts are expected to climb to an annual rate of 1.225 million in October after tumbling by 5.3 percent to a rate of 1.201 million in September.
The material has been provided by InstaForex Company -
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