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U.S. homebuilder confidence unexpectedly rises in October, survey shows By Reuters

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© Reuters. FILEPHOTO: Single-family homes that have been recently constructed are for sale in Encinitas California on July 31, 2019. REUTERS/Mike Blake

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(Reuters). Despite the fact that customer traffic increased for the second month straight, U.S. single-family housebuilders reported a rise in confidence in October. Builders remain cautious about how the rising costs of materials will affect home affordability.

The National Association of Homebuilders/Wells Fargo Housing Market Index increased 4 points, which is the highest since November 2020. This brings it to 80. This reading surpassed the median estimation of economists from a Reuters poll, which was 76. The increase pushed index to a 3-month high.

If the reading is above 50, it means that builders are more likely to consider conditions good than bad.

Robert Dietz (NAHB Chief Economist) said that “Builders are increasingly worried about affordability hurdles ahead of most buyers.”

All three subindexes showed improvement, with conditions improving in every region tracked in the monthly study.

Current conditions index rose 5 percentage points to 85, the highest index since June. Sales expectations index for the next six-months rose 3 percent to 84. This is the highest index since December. Customers traffic index rose 4 percentage points to 65, the greatest improvement since February.

Dietz indicated that affordability might also be tested, with interest rates likely to rise as the U.S. Federal Reserve starts to withdraw its economic support from the post-pandemic era. Widely expected, the Fed will soon announce that it plans to begin cutting $120 million a month in U.S. Treasuries as well as mortgage-backed bonds as soon as its next meeting is over two weeks. But any interest rate rise by the central bank can be seen as further off.

The Mortgage Bankers Association reports that home loan interest rates are still rising. In October, however, the average 30-year mortgage rate rose to 3.18 %, which is the highest level since June.

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