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Builders pessimistic about the housing market

Builders are pessimistic about the housing market, but are seeing a little more foot traffic after the worst summer for home sales in a decade.
/ Source: msnbc.com news services

Builders are pessimistic about the housing market, but are seeing a little more foot traffic after the worst summer for home sales in a decade.

The National Association of Home Builders says its monthly index of builders' sentiment rose in October to 16, the first increase in five months. The index had been at 13 for the past two months, the lowest level since March 2009.

October's reading was equal to June.

Readings below 50 indicate negative sentiment about the market. The last time the index was above 50 was in April 2006.

High unemployment, slow job growth and tight credit have kept people from buying homes.

Separately, the Federal Reserve reported Monday that industrial production fell in September for the first time since the recession ended, as weak consumer demand led factories to pull back.

The Fed said output at the nation's factories, mines and utilities dropped 0.2 percent last month.

Industrial production grew 4.8 percent in the July-September quarter, slower than the 7 percent gains in each of the first two quarter of this year.

Factory output, the largest element of industrial production, fell 0.2 percent last month. Manufacturing posted monthly gains for the first year after the recession ended in June 2009. But since then it has fallen twice in the past four months.

Manufacturing has helped drive economic growth as businesses restocked and replaced worn-out equipment. September's decline could slow that trend. Without consumer demand to take up the slack, industry can't maintain its strong growth.

Production of construction and consumer goods dropped last month as high unemployment made Americans reluctant to spend. Lower production of automotive products, appliances, and energy offset a small gain in business equipment production. Production of machinery and electrical equipment also fell.

American factories were operating at 74.7 percent of their capacity in September, down 0.1 percent from August. That was the first drop since June 2009, when the deepest recession since the Great Depression ended.

Production by mines grew 0.7 percent. Utility output fell 1.9 percent.