The National Association of Home Builders/Wells Fargo Housing Market Index decreased two points to 67 in June. This is the sixth straight month that builder sentiment has declined and the lowest reading since June 2020.
“Six consecutive monthly declines for the HMI is a clear sign of a slowing housing market in a high inflation, slow growth economic environment,” said NAHB Chairman Jerry Konter. “The entry-level market has been particularly affected by decline for housing affordability and builders are adopting a more cautious stance as demand softens with higher mortgage rates. Government officials need to enact policies that will support the supply-side of the housing market as costs continue to climb.”
“The housing market faces both demand-side and supply-side challenges,” said NAHB Chief Economist Robert Dietz. “Residential construction material costs are up 19% year-over-year with cost increases for a varity of building inputs except for lumber, which has experienced recent declines due to a housing slowdown. On the demand-side of the market, the increase for mortgage rates for the first half of 2022 has priced out a significant number of prospective home buyers, as reflected by the decline for the traffic measure of the HMI.”
The HMI component measuring buyer traffic decreased five points to 48, marking the first time this gauge has fallen below the breakeven level of 50 since June 2020. The component measuring current sales conditions fell one point to 77, and the component measuring sales expectations in the next sixth months fell two points to 61.
Looking at the three-month moving averages for regional HMI scores, the Northeast fell one point to 71, the Midwest dropped six points to 56, the South fell two points to 78, and the West posted a nine-point decline to 74.
Read the NAHB release.