U.S. builder confidence remains near eight-year high

U.S. builder confidence for newly-built, single-family homes remained near the highest level in almost eight years in September, a leading industry report said on Tuesday.

The builder sentiment index registered 58 in September, unchanged from August, still hanging at the highest level since November 2005, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). Any reading over 50 indicates that more builders view sales conditions as good rather than poor.

"Following a solid run up in builder confidence over the past year, we are seeing a pause in the momentum as consumers wait to see where interest rates settle and as the headwinds of tight credit, shrinking supplies of lots of development and increasing labor costs continue," said NAHB Chief Economist David Crowe.

Mortgage rates have increased more than one full percentage point since early May, and the market anticipates the trend to continue, albeit gradually, during the next year.

"Despite the rise in mortgage rates, we expect the housing recovery to continue, with the mortgage market shifting away from refinance activity and more toward purchase activity," said Fannie Mae Chief Economist Doug Duncan.

In September, three HMI indices were mixed. The component gauging current sales conditions held at 62, the highest level since January 2006. The component measuring sales expectations for the next six months dipped three points to 65. And the component measuring traffic of prospective buyers climbed one point to 47.