U.S. Homebuilder Confidence Slips In January After Jumping In December

(RTTNews) - After reporting a significant improvement in homebuilder confidence in the previous month, the National Association of Home Builders released a report on Thursday showing a modest pullback in confidence in the month of January.

The report said the NAHB/Wells Fargo Housing Market Index edged down to 56 in January from a downwardly revised 57 in December.

Economists had expected the index to come in unchanged compared to the 58 originally reported for the previous month.

Despite the unexpected pullback, the housing market index remains above the reading of 54 recorded in November.

"Following an unexpected jump last month, builder confidence has essentially leveled out and is holding at a solid level," said NAHB Chairman Rick Judson. "Many markets continue to improve and this bodes well for future home sales."

The unexpected pullback by the housing market index reflected decreases by all three components that make up the index.

The index gauging current sales conditions edged down to 62 in January from 63 in December, while the index gauging expectations for future sales dropped to 60 from 62.

Additionally, the index gauging traffic of prospective buyers fell to 40 in January from 43 in December, hitting its lowest level since June.

NAHB Chief Economist David Crowe said, "Rising home prices, historically low mortgage rates and significant pent-up demand will drive a continuing, gradual recovery in the year ahead.

"However, the pace of the recovery could be stronger were it not for rising construction costs and inaccurate appraisals that are keeping some home sales from going through," he added.

Friday morning, the Commerce Department is scheduled to release a separate report on new residential construction in the month of December.

Economists expect housing starts to drop to an annual rate of 985,000 in December after jumping to 1.091 million in November.