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The NAHB’s housing market index rose to 41 in October, right in line with expectations.The index climbed for the sixth straight month and is at its highest level since June 2006.
The index that measures the traffic of prospective buyers climbed to 35, its highest level since April of 2006.
But tight lending conditions have limited new construction and purchases.
“The slight gain in builder confidence this month is an indication that, while still moving forward, the speed at which the housing recovery is proceeding is being moderated by the various constraints such as tight credit, difficult appraisals and more recently, the limited inventory of buildable lots in certain markets,” explained NAHB chief economist David Crowe in a press release.
“These are the complicating factors that make it difficult for builder confidence to reach and surpass the 50-point mark, at which an equal number of builders view sales conditions as good versus poor.”
The NAHB Housing Market Index for October will be released at 10 a.m. ET. The index, a crucial indicator of homebuilder confidence, hit its highest level since 2006 last month.
Economists polled by Bloomberg expect the headline housing market index to rise to 41 in October, from 40 the previous month.
The housing market index is a weighted average of various indexes including present sales of new homes, sale of new homes expected in the next six months, and traffic of prospective buyers in new homes.