The November NAHB/Wells Fargo Housing Market Index held steady at 54 from a one-point downwardly revised October level. The index has remained above 50 for six consecutive months, the first time since early 2006. Of the three components, current sales remained unchanged at 58, expectations for future sales declined one point from a one-point downwardly revised figure and rests now at 60 and above 50 for the 10th consecutive month. The traffic component was at 42, down one point from a one-point downwardly revised 43.
The index leveled off in September and dropped one point as interest rates finally took their toll on builder and consumer confidence. The residual of the October government shut down and game of chicken in Washington took a more dramatic toll on builder confidence as the HMI fell three points from September to October. The survey is taken in the first 10 business days of the month so the October shut down was in effect as most of the responses were collected. The one-point downward revision to October reflects the continued concern from late submissions even as the government crisis was postponed.
November brings a continued concern over the functioning of the federal government as well as uncertainty about mortgage rates and a relatively slow economic recovery. Builders remain modestly optimistic as the index remains above 50 (more builders rate the market good as opposed to poor) but express their continuing concerns about rising costs of land, labor and building materials. The underlying improvement in employment remains the primary factor that will lead to continued growth in the housing market and NAHB expects that to continue.