Builder confidence in the market for newly built single-family homes fell three points to 29 in October, the lowest reading since June 2012, according to the National Association of Home Builders/Wells Fargo Housing Market Index. NAHB attributed the decline to rising mortgage rates, energy and material costs, and worsening labor and lot conditions.
All three components declined. Current sales conditions fell two points to 33, sales expectations for the next six months dropped five points to 32, and prospective buyer traffic fell five points to 18. Excluding the start of the pandemic in April 2020, buyer traffic is at its lowest level since April 2012. Any reading above 50 means more builders view conditions as good than poor.
Forty-three percent of builders cut prices in October, the highest share since 2020. The average price cut held at 6% for a seventh straight month. Sixty-five percent of builders used sales incentives, the 19th consecutive month that at least 60% have done so.
More than a third of builders reported immigration enforcement activity in their markets over the past month, which caused construction delays and discouraged legal workers from showing up.
“Mortgage rates have climbed well above 7% in recent weeks, and higher gas prices and inflation have further weakened buyer traffic across much of the country,” said NAHB Chairman Bill Owens.
“Demand persists, but higher mortgage rates, elevated construction costs and weaker consumer confidence are keeping more buyers on the sidelines,” said NAHB Chief Economist Robert Dietz.
Read the full report here.
