Sentiment among American homebuilders unexpectedly increased to a three-month high as builders saw greater prospects for industry demand despite elevated material costs and shortages of labor and lots, according to data Tuesday from the National Association of Home Builders/Wells Fargo.
The Builders' Housing Market Index increased to 68 (the estimate was 64) from 64 in July. The measure of the six-month sales outlook rose to 78 from 73. The index of current sales climbed to 74 from 70.
The climb follows an easing to an eight-month low in July as builders were challenged with higher materials costs for items such as lumber. Builders are upbeat about a strengthening job market and still-low mortgage rates that are helping prospective buyers. Housing remains a modest contributor to overall U.S. growth that is finding its footing after a rough start to 2017.
"Our members are encouraged by rising demand in the new-home market," NAHB Chairman Granger MacDonald, a homebuilder and developer from Kerrville, Texas, said in a statement. "This is due to ongoing job and economic growth, attractive mortgage rates, and growing consumer confidence."
"GDP growth improved in the second quarter, which helped sustain housing demand," Robert Dietz, chief economist at NAHB, said in the statement. "However, builders continue to face supply-side challenges, such as lot and labor shortages and rising building material costs."
Readings greater than 50 indicate more respondents reported good market conditions. The gauge of prospective buyer traffic increased to 49 from 48. Confidence rose in all four regions, led by a 7-point surge in the South.
