The National Association of Home Builders/Wells Fargo Housing Market Index decreased 12 points to 55 in July. This is the seventh straight month that builder sentiment has declined and the lowest reading since May 2020. This is also the largest single-month drop in the history of the HMI, except for the 42-point drop in April 2020.
“Production bottlenecks, rising home building costs and high inflation are causing many builders to halt construction because the cost of land, construction and financing exceeds the market value of the home,” said NAHB Chairman Jerry Konter. “In another sign of a softening market, 13% of builders in the HMI survey reported reducing home prices in the past month to bolster sales and/or limit cancellations.”
“Affordability is the greatest challenge facing the housing market,” said NAHB Chief Economist Robert Dietz. “Significant segments of the home buying population are priced out of the market. Policymakers must address supply-side issues to help builders produce more affordable housing”
All three HMI components posted declines in July: Current sales conditions dropped 12 points to 64, sales expectations in the next six months decline 11 points to 50, and traffic to prospective buyers fell 11 points to 37.
Looking at the three-month moving averages for regional HMI scores, the Northeast fell 6 points to 65, the Midwest dropped 4 points to 52, the South fell 8 points to 70, and the West posted a 12-point decline to 62.
Read the NAHB release.
