Homebuilders' optimism drops as mortgage rates rise


August 21, 2005|By Bloomberg News

A gauge of U.S. homebuilder optimism fell for the second straight month in August as rising mortgage rates threatened to erode the record pace of home sales.

The National Association of Home Builders/Wells Fargo's index of builder confidence fell to 67 this month, matching the low for the year, from 70 in July. The index has averaged 69.4 this year.

Builder confidence tends to decline with increases in 30-year fixed mortgage rates. Economists are predicting that borrowing costs will rise, slowing sales from the first half's record pace and adding less to growth.

The group's gauge of buyer traffic fell to 50 this month, matching the low for the year, from 55 in July. The current sales measure fell to 72 from 76 and sales expectations for the next six months were unchanged at 77. - - Bloomberg News

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