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Homebuilder Confidence Muted Amid Affordability Pressures, NAHB Says

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Homebuilder Confidence Muted Amid Affordability Pressures, NAHB Says

Homebuilder confidence in the US unexpectedly ticked higher this month, although builders continued to deal with rising construction costs amid a renewed surge in gas and diesel prices, the National Association of Home Builders and Wells Fargo said Monday.

The housing market index, which covers new single-family homes, ticked up by one point sequentially to 35 in August. The consensus was for the reading to decline to 33 in a survey compiled by Bloomberg.

"While builder sentiment edged higher in August, builders continue to contend with high construction costs and broader economic uncertainty," NAHB Chairman Bill Owens said. "Rising gas and diesel prices are pushing up material costs, and (speculative) home building remains weak as many prospective buyers stay on the sidelines."

A "spec house" is a home built with no buyer lined up in advance.

US retail gasoline prices averaged $4.0636 per gallon Monday, compared with $4.0091 a week ago and $3.9814 a month ago, according to data from AAA, a travel organization that tracks fuel prices in the country.

The 60-day ceasefire between the US and Iran has expired, with the two countries still locked in a stalemate and no apparent signs of a breakthrough. President Donald Trump said last week that Americans must brace for slightly higher gas prices as traffic through the Strait of Hormuz remained halted.

West Texas Intermediate crude oil has gained 0.2% so far this month, while Brent is down 1.5%. Both registered sharp gains in July.

"Affordability challenges driven by elevated mortgage rates and rising material costs are likely to keep sentiment depressed in the coming months," Sara Godfrey, associate US economist at Oxford Economics, said in remarks emailed to.

The 30-year fixed mortgage rate reached 6.69% as of Aug. 6, a nearly one-year high, before slipping to 6.67% as of Aug. 13.

About 35% of homebuilders cut prices this month, down from 37% in July, representing the 16th consecutive month that at least 30% of builders reported slashing prices to support demand, according to NAHB Chief Economist Robert Dietz. The average price reduction was 6% in August, unchanged from the month prior.

Last week, Redfin said the number of US homebuyers hit a record low in July, pushing the housing market further in buyers' favor amid ongoing macro uncertainty. National Association of Realtors data showed that existing home sales in the US fell more than expected last month as rising prices and mortgage rates continued to weigh on homebuying activity.

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