Builder confidence levels, which soared to record highs amid the booming housing market over the past two years, plunged eight points in May to a level of 69 on the National Association of Home Builders/Wells Fargo Housing Market Index.
It is the fifth consecutive decline in monthly builder sentiment and the lowest reading since June 2020.
“Housing leads the business cycle, and housing is slowing,” NAHB Chairman Jerry Konter said in a statement.
NAHB Chief Economist Robert Dietz said the housing market’s challenges are growing.
“Building material costs are up 19% from a year ago, in less than three months mortgage rates have surged to a 12-year high and based on current affordability conditions, less than 50% of new and existing home sales are affordable for a typical family,” Dietz stated. “Entry-level and first-time home buyers are especially bearing the brunt of this rapid rise in mortgage rates.”
Builder confidence levels over 50 indicate more builders view housing market conditions as good than poor.
