By Sarah Chaney 

WASHINGTON -- A gauge of U.S. home-builder confidence fell sharply in November, dragged down by heightened affordability concerns in the housing market.

The National Association of Home Builders on Monday said its housing-market index dropped by eight points to a reading of 60 in November. Economists surveyed by The Wall Street Journal had expected an index reading of 67 this month.

The index measures builder confidence in the market for new single-family homes.

Figures over 50 mean more builders see conditions as good rather than bad, which means that, despite the November drop, builder sentiment is still in positive terrain.

November's drop reflects builders' rising concerns over climbing interest rates and home prices. "For the past several years, shortages of labor and lots along with rising regulatory costs have led to a slow recovery in single-family construction," said Robert Dietz, NAHB chief economist. "While home price growth accommodated increasing construction costs during this period, rising mortgage interest rates in recent months coupled with the cumulative run-up in pricing has caused housing demand to stall."

Mr. Dietz said builders are taking a more cautious approach to the market, given the prospect of future interest-rate increases.

The index touched the highest level in 18 years in December, and pulled back this year as supply constraints continue to weigh on the housing market.

The Commerce Department releases its report on new-home construction Tuesday.

Write to Sarah Chaney at sarah.chaney@wsj.com

(END) Dow Jones Newswires

November 19, 2018 10:14 ET (15:14 GMT)

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