Builder confidence for newly built, single-family homes remained frozen at a downwardly revised index level of 54 in November as future government policy worked to dent consumer confidence, the latest National Association of Home Builders/Wells Fargo Housing Market Index revealed.
This is the sixth month in a row in which more builders view market conditions as good rather than poor, but stability alone is not enough to raise the bar higher.
"Policy and economic uncertainty is undermining consumer confidence," said NAHB Chief Economist David Crowe.
"The fact that builder confidence remains above 50 is an encouraging sign, considering the unresolved debt and federal budget issues cause builders and consumers to remain on the sideline," Crowe explained.
Meanwhile, the HMI three-month moving average was mixed in the four major U.S. regions, as no movement was recorded in the South or West. However the Northeast witnessed a one-point gain to an index score of 39, and the Midwest fell three points to a score of 60.
"Given the current interest rate and pricing environment, consumers continue to show interest in purchasing new homes, but are holding back because Congress keeps pushing critical decisions on budget, tax and government spending issues down the road," said NAHB Chairman Rick Judson.
"Meanwhile, builders continue to face challenges related to rising construction costs and low appraisals," Judson added.
"The index really highlights the activity level we have seen in housing which has held steady after falling noticeably for the first half of the year," said Lindsey Piegza, managing director and chief economist with Sterne Agee.
"It is not great right now, and the outlook looks even grimmer, with financing costs up 100 basis points over the past 12 months," Piegza added.
In addition, builders are seeing activity levels subside, which does not bode well for year-end sales and momentum going into the first quarter of 2014, she noted.
Overall, the market is still favorable. "However if you put this in a longer context, affordability is still accommodative to homebuyers. But in a shorter timeframe and tepid job environment, 100 basis points is having a very negative affect on activity," she explained.