Builders Confidence Evaporates Amid Elevated Mortgage Rates
WRE News August 17, 2023
Buyer
WRE News August 17, 2023
Buyer
After seven consecutive months of rising optimism, builder confidence dropped in August as mortgage rates neared the 7% mark.
The National Association of Home Builders (NAHB)/Wells Fargo (NYSE: WFC) Housing Market Index (HMI) saw builder confidence in the market for newly-built single-family homes falling by six points this month to 50. All three major HMI indices posted declines: the index measuring current sales conditions fell five points to 57, the component charting sales expectations in the next six months dropped four points to 55 and the gauge measuring traffic of prospective buyers dipped six points to 34.
Looking at the three-month moving averages for regional HMI scores, the Northeast increased four points to 56, the Midwest and South were both unchanged at 45 and 58, respectively, and the West edged down a single point to 50.
“Rising mortgage rates and high construction costs stemming from a dearth of construction workers, a lack of buildable lots, and ongoing shortages of distribution transformers put a chill on builder sentiment in August,” said NAHB Chairman Alicia Huey, a custom home builder and developer from Birmingham, Alabama. “But while this latest confidence reading is a reminder that housing affordability is an ongoing challenge, demand for new construction continues to be supported by a lack of resale inventory, as many homeowners elect to stay put because they are locked in at a low mortgage rate.”
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