Builder Confidence Falls to Lowest Level Since January 2023By Claudia Larsen
As mortgage rates have climbed to a 23-year high, builder confidence has fallen to the lowest reading since January, according to new data from the National Association of Home Builders (NAHB).
The NAHB/Wells Fargo Housing Market Index (HMI) found that builder confidence fell four points to 40 in October, following a five-point drop in September and a six-point drop in August. “Builders have reported lower levels of buyer traffic, as some buyers, particularly younger ones, are priced out of the market because of higher interest rates,” said NAHB Chairman Alicia Huey. “Higher rates are also increasing the cost and availability of builder development and construction loans, which harms supply and contributes to lower housing affordability.” Builders continue to offer incentives and discounts in order to combat economic challenges, as seen in September and August:
Looking at the three-month moving averages for regional HMI scores, the Northeast fell four points to 50, the Midwest dropped three points to 39, the South fell five points to 49 and the West posted a six-point decline to 41. “The housing affordability crisis can only be solved by adding additional attainable, affordable supply,” said NAHB Chief Economist Robert Dietz. “Boosting housing production would help reduce the shelter inflation component that was responsible for more than half of the overall Consumer Price Index increase in September and aid the Fed’s mission to bring inflation back down to 2%. However, uncertainty regarding monetary policy is contributing to affordability challenges in the market.” For the full report, click here. Claudia Larsen is an associate editor for RISMedia. |
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