U.S. Housing Market Index Unexpectedly Drops To Eight-Month Low In August

(RTTNews) - Homebuilder confidence in the U.S. has unexpectedly continued to deteriorate in the month of August, according to a report released by the National Association of Home Builders on Thursday.

The report said the NAHB/Wells Fargo Housing Market Index fell to 39 in August from a downwardly revised 41 in July.

The dip surprised economists, who had expected the index to inch up to 43 from the 42 originally reported for the previous month.

The housing market index decreased for the fourth consecutive month, falling to its lowest level since hitting 37 last December.

"Challenging housing affordability conditions remain the top concern for prospective home buyers in the current reading of the HMI, as both present sales and traffic readings showed weakness," said NAHB Chairman Carl Harris.

He added, "The only sustainable way to effectively tame high housing costs is to implement policies that allow builders to construct more attainable, affordable housing."

The unexpected decline by the headline index came as the index charting current sales conditions and the gauge charting traffic of prospective buyers both fell by two points to 44 and 25, respectively.

Meanwhile, the NAHB said the component measuring sales expectations in the next six months inched up to 49 in August from 48 in July.

"With current inflation data pointing to interest rate cuts from the Federal Reserve and mortgage rates down markedly in the second week of August, buyer interest and builder sentiment should improve in the months ahead," said NAHB Chief Economist Robert Dietz.

On Friday, the Commerce Department is scheduled to release its report on new residential construction in the month of July.

Housing starts are expected to decrease to an annual rate of 1.330 million in July after jumping to a rate of 1.353 million in June, while building permits are expected to fall to an annual rate of 1.430 million after surging to a rate of 1.454 million in June.