The National Association of Home Builders (NAHB) index for October declined slightly to 63 from 65 previously, although this was the second highest reading for 2016. The data was in line with market expectations and should underpin overall confidence in the housing sector.
The current sales index declined to 69 from 71 previously, while the buyer traffic index also retreated slightly to 46 from 47 previously. The index for sales expectations in six month, however, rose to 72 from 71.
On a three-month moving average basis, there were increases in all four regions in the latest month, which indicates underlying momentum in the sector.
According to NAHB Chief Economist Dietz, the reading of future sales expectations above 70 for the past two months will help sustain continued growth in the single-family market in the months ahead.
According to the NAHB, there were further concerns surrounding the shortages of lots and labor. There has been strong evidence of labor shortage throughout the past few months and supply issues are likely to be important in curbing the potential for increased building rates.
There will also tend to be upward pressure on both wages and house prices, while sales of new homes could also be restricted. The interaction of supply and demand issues will be a pivotal factor for the housing sector and wider labor market over the next few months.
There was no market reaction with EUR/USD below 1.1000 after failing to sustain a bounce following the US CPI data, while Treasuries were in the red by around 3 ticks on the day. US equity markets were higher, although below opening levels.