Home builder confidence edged down to 34 in July
Builder confidence in the newly constructed single-family home market was 34 in July, down two points from an upwardly revised reading of 36 in June, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released today. Sentiment has remained below 40 for 15 consecutive months, the longest such stretch since 2012.
“Many potential buyers are sitting on the sidelines as they wait for lower mortgage rates, greater certainty about inflation and a clearer economic outlook,” said NAHB President Bill Owens, a home builder and remodeler in Worthington, Ohio. “The recently passed 21st Century PATH to Housing Act contains important provisions on land use and zoning, regulatory reform, and financial tools that address barriers facing builders and buyers, but these reforms will take time to implement.”
“With the HMI below 40 for 15 consecutive months, affordability remains the primary challenge for the homebuilding industry as high mortgage rates, expensive land, rising material costs and a persistent shortage of skilled labor continue to weigh on the market,” said NAHB Chief Economist Robert Dietz. “Looking ahead, the newly enacted housing law is a positive step that will help expand housing supply and lower overall housing costs, although more policy changes are needed at the state and local levels.”
The latest HMI survey also found that 37% of builders reported a price cut in July, up from 35% in June and 32% in May. Meanwhile, the average price reduction in July was 6%, which is the same rate as the previous month. The use of sales incentives was 63% in July, up slightly from 62% in June, and marking the 16th consecutive month this share reached 60% or higher.
Looking at the three-month moving averages for regional HMI scores, the Northeast rose one point to 45, the Midwest rose two points to 45, the South fell one point to 33, and the West fell one point to 26.
Read the NAHB rid.
