U.S. homebuilders are feeling more optimistic this month, reflecting a recent rebound in sales of newly built homes.
The National Association of Home Builders/Wells Fargo builder sentiment index released Nov. 16 rose two points to 70 this month. That’s the highest reading since March.
Readings above 50 indicate more builders see sales conditions as good rather than poor. The index has remained above 60 since September of 2016.
According to the latest survey by FactSet, the index exceeded expectations for a reading of 68 among industry analysts.
Readings gauging builders’ view of single-family home sales rose from October, while an outlook for sales over the next six months declined. A measure of traffic by prospective buyers also rose.
A supply crunch of existing homes has frustrated many would-be buyers and hobbled the housing market this year. At the same time, it’s helping to drive more demand for newly built homes.
Sales of new U.S. homes jumped in September to a seasonally adjusted annual rate of 667,000, the highest level since October 2007. Data on last month’s new-home sales are due out next week.
A solid job market, low unemployment rate and growing economy have helped drive demand for homeownership. But builders are struggling to keep up with demand, saying they are having difficulty finding the workers they need to start new projects.
Construction of new homes fell 4.7 percent in September, the biggest decline in six months, reflecting weakness in both single-family activity and apartment buildings.
Homebuilders are increasingly focused on higher-priced housing, potentially freezing out potential buyers of more modest incomes. The average price of a new home rose to $385,200 in September, the highest on records dating back to 1963.
This month’s builder index was based on 327 respondents.
A measure of current sales conditions for single-family homes rose two points to 77, while an outlook for sales over the next six months slipped one point to 77. Builders’ view of traffic by prospective buyers increased two points to 50.