After seven consecutive months of gains, builder confidence declined six points in August to a level of 50 on the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index.
NAHB cited rising mortgage rates—which were nearing 7%—as one of the key causes of the downturn in builder sentiment.
“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,” NAHB Chairman Alicia Huey said in a statement. “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 home owners elect to stay put because they are locked in at a low mortgage rate.”
Builder confidence levels above 50 indicate more builders view conditions as “good” than “poor.”