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By Lorraine Woellert
By Lorraine Woellert
WASHINGTON - Confidence among U.S. homebuilders fell to a four-month low in October, underscoring the toll that partisan brinkmanship in Washington and the federal government shutdown are exacting on the economy.
The National Association of Home Builders/Wells Fargo index of builder sentiment decreased to 55 this month from a revised 57 in September that was weaker than initially estimated, the Washington-based group reported today. Readings above 50 mean more builders view conditions as good than poor.
The figures show a partial government closing that began Oct. 1 and a political showdown over raising the nation’s borrowing limit are sapping sentiment and prompting companies and consumers to put off spending decisions. Mortgage rates close to a two-year high are also slowing gains in real estate, which has been a source of strength for the expansion.
“The economy is grappling with this near-term shock from the drama in Washington,” said Ryan Wang, an economist at HSBC Securities USA Inc. in New York and the top forecaster of the homebuilder index, according to data compiled by Bloomberg. “Sure you can blame the shutdown, but there’s another factor, which is the rise in interest rates.”
The median forecast in a Bloomberg survey called for a decline to 57. Estimates of 48 economists ranged from 54 to 60 after a previously reported September reading of 58.
Stocks climbed amid speculation lawmakers were making progress toward an agreement on raising the debt limit. The Standard & Poor’s 500 Index rose 1.3 percent to 1,720.46 at 11:46 a.m. in New York.
“It’s unclear how quickly the economy will bounce back,” Wang said. “It should be a temporary shock.”
Stabilization in the European economy will help American companies and the expansion. In the U.K., claims for unemployment benefits fell last month by the most since June 1997, data today from the Office for National Statistics in London showed.