U.S. homebuilders' confidence in the housing market held this month at its highest level in nearly eight years. But builders are starting to worry that sales may slow if mortgage rates continue to rise.
The National Association of Home Builders/Wells Fargo builder sentiment index released Tuesday registered at 58 this month. That's unchanged from August, which was revised down from an initial reading of 59.
Readings above 50 indicate more builders view sales conditions as good, rather than poor.
In the latest survey, which included 264 respondents, a measure of current sales conditions was unchanged, while a gauge of traffic by prospective buyers rose one point. But builders' outlook for single-family home sales over the next six months fell three points.
"While builder confidence is holding at the highest level in nearly eight years, many are reporting some hesitancy on the part of buyers due to the sharp increase in interest rates," said Rick Judson, the NAHB's chairman.
Mortgage rates have risen more than a full percentage point since May, when Federal Reserve Chairman Ben Bernanke first indicated the Fed could slow its $85 billion a month in bond buying this year.
The Fed is meeting this week and many economists expect it will begin to reduce its bond buying by about $10 billion, according to a survey by The Associated Press. The bond purchases are intended to lower longer-term interest rates and encourage more borrowing and spending.
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