Confidence among U.S. homebuilders climbed in August to the highest level in almost a decade, indicating improvement in the residential real estate market.
The National Association of Home Builders/Wells Fargo builder sentiment gauge rose to 61, the highest since November 2005, from 60 in the prior two months, figures from the Washington-based group showed on Monday. Readings greater than 50 mean more respondents report good market conditions.
Measures of current single-family home sales and prospective buyer traffic advanced, according to the data, signaling that a strong job market and historically low mortgage rates will continue to generate demand.
Fewer properties available for purchase and rising prices mean developers may begin more projects, accelerating the rebound in construction.
"Today's report is consistent with our forecast for a gradual strengthening of the single-family housing sector in 2015," David Crowe, the National Association of Home Builders chief economist, said in a statement. "Job and economic gains should keep the market moving forward at a modest pace throughout the rest of the year."
The results matched the median forecast of 45 economists surveyed by Bloomberg. Estimates ranged from 58 to 62.
The group's gauge of prospective buyer traffic rose to 45, the best reading this year, from 43 the prior month. The index of current single-family home sales increased to 66, the highest since November 2005.
The measure of the six-month sales outlook held at 70 for a second month, an almost 10-year high.
"The fact the builder confidence has been in the low 60s for three straight months shows that single-family housing is making slow but steady progress," National Association of Home Builders Chairman Tom Woods, a homebuilder from Blue Springs, Mo., said in the statement.
Builder confidence climbed in three regions, rising to 65 in the West, 63 in the South, and 59 in the Midwest. Sentiment fell in the Northeast to 43 from 49.
Gains in employment are bolstering home purchases. Payrolls grew in July by 215,000 workers after a 231,000 gain in the prior month, and the unemployment rate held at a seven-year low of 5.3 percent. The hiring has infused the economy with new paychecks that have supported the spending on housing and autos, among other expenses.
Borrowing costs remain relatively low. The average 30-year, fixed-rate mortgage was 3.94 percent in the week ended Aug. 13, close to the level at the start of 2015 and below last year's high of 4.53 percent reached in early January 2014, according to data from Freddie Mac, the Federal Home Loan Mortgage Corp., in McLean, Va.
Federal Reserve policy makers are considering raising interest rates for the first time since 2006. Some prospective homebuyers may be spurred to move ahead with their purchasing plans as the rate rise looms. Seventy-seven percent of forecasters in a Bloomberg survey taken Aug. 7-12 said the Fed will raise its main policy rate next month.
A Commerce Department report due today may show housing starts increased to a 1.18 million annualized pace in July from 1.17 million the prior month, according to the median forecast in a Bloomberg survey. That would be the second-highest level since November 2007.
Information for this article was contributed by Kristy Scheuble of Bloomberg News and Josh Boak of The Associated Press.
Business on 08/18/2015