WRE News September 20, 2023
Buyer
Builder confidence in the market for newly-built single-family homes in September fell five points to 45, according to the latest National Association of Home Builders (NAHB)/Wells Fargo (NYSE:WFC) Housing Market Index (HMI) data. This follows a six-point drop in August and is the first time in five months that the HMI dropped below the break-even measure of 50.
“High mortgage rates are clearly taking a toll on builder confidence and consumer demand, as a growing number of buyers are electing to defer a home purchase until long-term rates move lower,” said NAHB Chief Economist Robert Dietz. “Putting into place policies that will allow builders to increase the housing supply is the best remedy to ease the nation’s housing affordability crisis and curb shelter inflation. Shelter inflation posted a 7.3% year-over-year gain in August, compared to an overall 3.7% consumer inflation reading.”
All three major HMI indices posted declines in September. The HMI index gauging current sales conditions fell six points to 51, the component charting sales expectations in the next six months also declined six points to 49 and the gauge measuring traffic of prospective buyers dropped five points to 30.
Looking at the three-month moving averages for regional HMI scores, the Northeast fell two points to 54, the Midwest dropped three points to 42, the South fell four points to 54 the West posted a three-point decline to 47.
The new HMI data follows last month’s release showing positive readings in the NAHB’s Multifamily Market Survey, which found the Multifamily Production Index with a reading of 56 for the second quarter while the Multifamily Occupancy Index had a reading of 89.
“Demand for multifamily housing is being supported by the low availability and high cost of single-family homes on the market, although multifamily development faces many of the same supply-side challenges as single-family,” said Dietz. “On balance, we forecast that multifamily starts will decline during the second half of 2023 due to tight financing conditions and local concerns over supply.”
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