Bulletin
Investor Alert

Economic Report Archives | Email alerts

Sept. 18, 2018, 4:07 p.m. EDT

Home builder confidence stalls as tariffs bite

Home builders call their sentiment ‘solid’ but it’s lower than the 2017 full-year average

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    PulteGroup Inc. (PHM)
  • X
    KB Home (KBH)

or Cancel Already have a watchlist? Log In

By Andrea Riquier


Bloomberg News/Landov
A contractor installs roofing for a home under construction at a Toll Brothers Inc. development.

The numbers: The National Association of Home Builders’ monthly confidence index was unchanged at 67 in September.

What happened: The tracker of builder sentiment matched the Econoday consensus forecast of a flat reading. That’s a level the industry group calls “solid,” but it’s a full point below the full-year average from 2017, and matches the low mark for 2018, signalling the homebuilding recovery may have run out of steam.

The components of the index were mixed. The measure of current sales conditions rose one point to 74, and the gauge of expectations for the next six months increased two points to 74. But the sub-index that tracks buyer traffic was unchanged at 49.

Readings over 50 signal improving conditions.

Read: Home sales hit a fresh low in July as housing market looks for direction

Big picture: Tariffs aren’t helping home builders, who are still dogged by the same headwinds that they’ve faced since the slow housing recovery began several years ago. “Housing affordability is becoming a challenge, as builders face overly burdensome regulations and rising material costs exacerbated by an escalating trade skirmish,” said NAHB Chief Economist Rob Dietz.

The sentiment index is closely watched for clues on whether builders will start more housing projects. The Commerce Department will release data on new construction started in August on Wednesday, and the MarketWatch consensus forecast is for a pace of 1.243 million homes, up nearly 01.% from July.

What they’re saying: “Mortgage demand popped up in August, so we expect a modest, and likely temporary, one-point uptick in the NAHB index, to 68,” said Pantheon Macro’s chief economist, Ian Shepherdson, before the release. “But the underlying trend is decaying slowly,” added Shepherdson, who’s been notably bearish on the housing economy.

Market reaction: Builder stocks have been pummeled this year as investors anticipate slower growth in housing and higher costs for construction companies. Shares of PulteGroup, Inc. /zigman2/quotes/201694804/composite PHM -0.32%   and KBHome /zigman2/quotes/206220859/composite KBH -1.98%   are down 20% in that period.

Also read : Buyers are ‘fatigued,’ ‘burned out,’ but kept house-hunting even in August, real-estate agents say

/zigman2/quotes/201694804/composite
US : U.S.: NYSE
$ 43.71
-0.14 -0.32%
Volume: 4.15M
Jan. 24, 2020 6:30p
P/E Ratio
13.33
Dividend Yield
1.10%
Market Cap
$11.85 billion
Rev. per Employee
$1.98M
loading...
/zigman2/quotes/206220859/composite
US : U.S.: NYSE
$ 38.12
-0.77 -1.98%
Volume: 1.80M
Jan. 24, 2020 6:30p
P/E Ratio
13.31
Dividend Yield
0.94%
Market Cap
$3.37 billion
Rev. per Employee
$2.37M
loading...

Andrea Riquier reports on housing and banking from MarketWatch's New York newsroom. Follow her on Twitter @ARiquier.

Get news alerts on PulteGroup Inc. and KB Home — or create your own.
This Story has 0 Comments
Be the first to comment
More News In
Economy & Politics

Story Conversation

Commenting FAQs »
Link to MarketWatch's Slice.