U.S. homebuilders lost a little confidence in the housing market this month, but remain generally upbeat, ahead of the spring home-selling next season.
The National Association of Home Builders/Wells Fargo builder sentiment index, released Thursday, dipped to 56. That’s down from December’s reading of 57, which was revised one point lower from its initial estimate.
Readings above 50 indicate more builders view sales conditions as good, rather than poor.
Builders’ view of current sales conditions for single-family homes, their outlook for sales over the next six months, and traffic by prospective buyers, each declined since December.
Even so, the overall index is nine points higher than a year ago, reflecting a stronger U.S. housing market.
“Rising home prices, historically low mortgage rates and significant pent-up demand will drive a continuing, gradual recovery in the year ahead,” said David Crowe, the NAHB’s chief economist.
The spring buying and selling season kicks off next month, traditionally the time of the year that sets the tone for residential hiring and construction. Many builders, particularly smaller firms, sell homes that will take months to build.
While average U.S. mortgage rates for fixed mortgages remain near historically low levels, they have risen more than a full percentage point since hitting record lows a year ago. That slowed sales during the summer and through much of the fall.
Sales of new homes dipped 2.1 percent in November, to a seasonally adjusted annual rate of 464,000, according to the Commerce Department. Still, the government revised sales figures higher for the previous three months, an encouraging sign heading into the spring.
The annual pace of new-home sales remains well below the 700,000 generally consistent with a healthy market. But overall, 2013 represented the best year for the housing market since the financial crisis, and most economists expect sales and prices to keep rising this year.
Builders broke ground on homes at a seasonally adjusted annual rate of 1.09 million homes and apartments in November. That was the fastest pace since February 2008 and was 23 percent higher than in October.
Crowe noted that many homebuilders face rising construction costs, and the fallout from inaccurate home appraisals, which have stymied some sales.
That may be dimming the outlook for some of the respondents polled in the latest NAHB survey, which included responses from 349 builders.
A measure of current sales conditions for single-family homes dipped one point to 62. Builders’ outlook for single-family home sales over the next six months slipped two points to 60, while a gauge of traffic by prospective buyers fell three points from last month, to 40.
Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data from the homebuilders association.