Homebuilder confidence in the US unexpectedly decreases

WASHINGTON: Confidence among US homebuilders unexpectedly fell in October on mounting concern sales will retrench once government credits expire.

The National Association of Home Builders/Wells Fargo confidence index declined to 18 from a reading of 19 in September that was the highest in more than a year, the Washington-based association said on Oct 19. Figures less than 50 mean most respondents view conditions as poor.

Builders are fretting as time runs out for purchasers to take advantage of the Obama administration’s US$8,000 (RM27,000) tax credit for first-time buyers, which expires at the end of November. All three components of the index, including measures of current and future sales and buyer traffic, dropped, signalling the market may take a step back after advancing for five consecutive months.

“Clearly, builders are experiencing the effects of the expiring tax credit on their sales activity, since it would be virtually impossible at this point to complete a new home sale in time to take advantage of that buyer incentive,” David Crowe, the NAHB’s chief economist, said in a statement. Crowe said 85% of the members polled thought an extension of the credit would boost sales.

The builder confidence index was forecast to rise to 20 this month, according to the median of 44 estimates of economists surveyed by Bloomberg News. Projections ranged from 18 to 21. The gauge, which was first published in January 1985, averaged 16 last year. – Bloomberg LP