Homebuilder sentiment hit its lowest level since August as high interest rates and record home prices continued to curb buyer appetite for new homes.
National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) It fell to 39 in August, down two points from July’s revised figure of 41, and economists polled by Bloomberg had expected a reading of 43.
Any number below 50 indicates that more builders view conditions as worse than better.
Housing affordability conditions are a major concern of prospective homebuyers in the current reading of the HMI, as both current sales and traffic metrics show weakness, NAHB President Carl Harris, a custom home builder from Wichita, Kan., wrote in a statement. .
The drop in builder confidence comes as mortgage rates have fallen to their lowest level in a year. The average rate on a 30-year fixed-rate mortgage fell to 6.47% from 6.73% last week. Freddie Mac said Last Thursday. New information will be released this afternoon.
However, three-quarters of responses to the August survey were collected in the first week of the month, when mortgage rates were above 6.7%, NAHB said.
As a result, builders cut home prices to boost sales in August, with 33% of builders cutting home prices, the highest share so far this year, up from 31% in July. Meanwhile, the use of sales incentives increased to 64% in August from 61% in July, marking the highest level since April 2019.
“Buyer interest and builder sentiment will improve in the coming months, as current inflation data suggest the Federal Reserve will cut interest rates in the second week of August and mortgage rates will significantly decrease,” NAHB Chief Economist Robert Deitz wrote in a press release. .
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