U.S. NAHB housing market index drops in October, homebuilding to improve gradually

The U.S. NAHB/Wells Fargo Housing Market Index dropped 2 points in October to 63 after climbing 6 points in September. The index dropped from the post-recession high of 65. However, the still-strong level indicates towards quite a positive sentiment amongst U.S. home builders.

The index was consistent with consensus expectations of 63. The current sales and buyer traffic components dropped, whereas expectations for future sales increased marginally. Even with the decline, home builders’ sentiment continues to stay strong as all the four regions continue to be above their six-month average, noted Wells Fargo. Sentiment rose in the Midwest and Northeast regions, but it dropped in the South and West regions.

Home builders’ expectations for single-family sales for the next six months increased 1 point to 72 in October. This is a 12-month high. The bolstering outlook of sales augurs well for new home construction as inventories of finished home sales continue to be lean, stated Wells Fargo.

“We continue to look for gradual improvement in homebuilding, and expect housing starts to register a 1.17 million unit annual rate in September and 1.16 million units for 2016 as a whole”, added Wells Fargo.