Investing.com - Home builder confidence unexpectedly worsened in December, falling to a three-and-a-half-year low as concerns over housing affordability persisted.
The National Association of Hombuilder’s housing market index dropped to 56 this month, from 60 in November. That was its lowest level since May 2015.
Economists had expected an increase to 61.
A reading above 50 indicates a favorable outlook on home sales; below indicates a negative outlook.
“We are hearing from builders that consumer demand exists, but that customers are hesitating to make a purchase because of rising home costs,” NAHB chairman Randy Noel explained.
“The fact that builder confidence dropped significantly in areas of the country with high home prices shows how the growing housing affordability crisis is hurting the market,” NAHB chief economist Robert Dietz said. “This housing slowdown is an early indicator of economic softening, and it is important that builders manage supply-side costs to keep home prices competitive for buyers at different price points.”