Bill Diviney, Senior Economist at ABN AMRO, notes that the NAHB homebuilder’s confidence index of US picked up in October to 68, the first rise in the index since May, and a sign that housing may be stabilising after going through a soft patch in recent months.
Key Quotes
“The NAHB report cited strong demand, historically low unemployment, and said builders were ‘relieved’ that lumber prices have continued to fall, having spiked in the first half of the year.”
“These factors are offsetting a significant rise in mortgage rates, which are up c.100bp over the past year, and 35bp over the past two months alone – reflecting the broader drift higher in long end rates.”
“With demand continuing to outstrip supply, and a gradual acceleration in wage growth, housebuilding could see a renewed tailwind over the coming 12 months – which could help offset some of the fall in non-residential investment we expect in 2019.”
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