Builder Confidence Grows Increasingly Pessimistic

WRE News October 21, 2023

Buyer

Builder Confidence Grows Increasingly Pessimistic

Builder confidence in the market for newly built single-family homes in October fell four points to 40 from a downwardly revised September reading, according to the Housing Market Index (HMI) data from the National Association of Home Builders (NAHB) and Wells Fargo (NYSE:WFC). This is the third consecutive monthly drop in builder confidence and lowest level since last January.

“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, a custom home builder and developer from Birmingham, Alabama. “Higher rates are also increasing the cost and availability of builder development and construction loans, which harms supply and contributes to lower housing affordability.”

All three major HMI indices posted declines this month. The HMI index gauging current sales conditions fell four points to 46, the component charting sales expectations in the next six months dropped five points to 44 and the gauge measuring traffic of prospective buyers dipped four points to 26.

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.”


We are Your GPS to Success Let’s Get Started

We Guide Homeowners through the complicated process of selling their home using our 4 Phase Selling Process and 3 Prong Marketing Strategy that alleviates their stress and moves them effortlessly to their next destination. Schedule a 15 Minute Complimentary Strategy Session Today

Follow Us On Instagram