Homebuilder Sentiment Sideways in July, But at Near 10-Year High

U.S. homebuilder sentiment stayed sideways in the month of July, but remains at its highest level in almost a decade, according to the NAHB/Wells Fargo Housing Market index. The National Association of Home Builders said on Thursday the NAHB/Wells Fargo Housing Market index stood at 60, which was the highest since November 2005, but unchanged from June’s upwardly adjusted level.

Last month was initially reported at 59. Economists polled by Reuters had predicted a July figure of 60. Readings above 50 indicate more builders view market conditions as favorable than poor. The index has not been below that level since June 2014.

“The fact that builder confidence has returned to levels not seen since 2005 shows that housing continues to improve at a steady pace,” said NAHB Chairman Tom Woods, a home builder from Blue Springs, Mo. “As we head into the second half of 2015, we should expect a continued recovery of the housing market.”

The single-family home sales component rose a point to 66, while the gauge of expectations for sales of single-family homes over the next six months rose two points to 71. The measure on prospective buyer traffic slipped to 43 from a five-month peak of 44 in June.

“This month’s reading is in line with recent data showing stronger sales in both the new and existing home markets as well as continued job growth,” said NAHB Chief Economist David Crowe. “However, builders still face a number of challenges, including shortages of lots and labor.”

Moreover, some analysts said rising home loan costs due to higher yields in the bond market could hamper housing demand.

U.S. 30-year mortgage rates averaged 4.23 percent last week, unchanged from the prior week and up from 4.04 percent from the end of 2014, the Mortgage Bankers Association said on Wednesday.

The median forecast from economists polled by Reuters had groundbreaking at an annualized rate of 1.110 million units last month, up from May’s 1.036 million annualized units. They projected building permits to dip to 1.150 million annualized units from an eight-year high of a 1.25 million-unit rate.

On Friday, the government will release its June data on domestic housing starts and permits at 8:30 a.m. (1230 GMT).