A report released by the National Association of Home Builders on Monday showed a notable improvement in U.S. homebuilder confidence in the month of October.
The report said the NAHB/Wells Fargo Housing Market Index climbed to 80 in October from 76 in September. Economists had expected the index to come in unchanged.
“Although demand and home sales remain strong, builders continue to grapple with ongoing supply chain disruptions and labor shortages that are delaying completion times and putting upward pressure on building material and home prices,” said NAHB Chairman Chuck Fowke.
The unexpected advance by the housing market index reflected increases by all three of the component indices.
The index gauging current sales conditions jumped to 87 in October from 82 in September, the gauge charting traffic of prospective buyers climbed to 65 from 61 and the component measuring sales expectations in the next six months rose to 84 from 81.
“Builders are getting increasingly concerned about affordability hurdles ahead for most buyers,” said NAHB Chief Economist Robert Dietz. “Building material price increases and bottlenecks persist and interest rates are expected to rise in coming months as the Fed begins to taper its purchase of U.S. Treasuries and mortgage-backed debt.”
“Policymakers must focus on fixing the broken supply chain,” he added. “This will spur more construction and help ease upward pressure on home prices.”
On Tuesday, the Commerce Department is scheduled to release a separate report on new residential construction in the month of September.
Housing starts are expected to rise to an annual rate of 1.620 million in September from 1.615 million in August, while building permits are expected to drop to a rate of 1.680 million from 1.728 million.