Confidence among U.S. homebuilders was unchanged at the start of year, indicating the residential real estate market was sustaining the steady progress made in 2015.
The National Association of Home Builders/Wells Fargo builder sentiment index held at 60 in January after the prior month was revised down a point, figures from the Washington-based group showed Jan. 19. Readings greater than 50 mean more respondents reported good market conditions and this month’s gauge was in line with the average for all of 2015.
The index meshes “with our forecast of modest growth for housing,” David Crowe, NAHB chief economist, said in a statement. “The economic outlook remains promising, as consumers regain confidence and home values increase, which will help the housing market move forward.”
An increase in the sentiment index of single-family home sales this month was offset by a dip in prospective buyer traffic that prompted builders to become less upbeat about the market’s outlook, according to the report. While low borrowing costs and higher property values have given Americans the opportunity to trade up, stronger gains in housing will depend on whether the economy can continue to add jobs at a robust pace.
The median forecast in a Bloomberg News survey of 48 economists called for a January reading of 61. Estimates ranged from 58 to 63. The gauge reached a 10-year high of 65 in October.
“After eight months hovering in the low 60s, builder sentiment is reflecting that many markets continue to show a gradual improvement,” NAHB Chairman Tom Woods, a builder from Blue Springs, Missouri, said in a statement.
The group’s gauge of prospective buyer traffic fell to a six-month low of 44 in January from 46 the prior month, while the index of current single-family home sales increased by 2 points to 67.
The measure of the six-month outlook decreased to 63, the lowest since May, from 66.
Builder confidence this month rose in Midwest and declined in the West, South and Northeast.
The progress of the labor market will help determine the strength of the housing market this year. In 2015, sales and construction picked up along with hiring. A surge in December payrolls capped the best back-to-back years for employment since 1998-99.
Americans interested in buying a home have also had access to historically cheap borrowing costs. The average 30-year, fixed-rate mortgage was 3.92% in the week ended Jan. 14, hovering close to where it was in early November.
Federal Reserve policymakers, who in December lifted interest rates for the first time since 2006, have signaled further adjustments will be gradual.