The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) declined 5 points to 45 in September.
“The two-month decline in builder sentiment coincides with when mortgage rates jumped above 7% and significantly eroded buyer purchasing power,” said NAHB Chairman Alicia Huey, a custom home builder and developer from Birmingham, Ala. “And on the supply-side front, builders continue to grapple with shortages of construction workers, buildable lots and distribution transformers, which is further adding to housing affordability woes. Insurance cost and availability is also a growing concern for the housing sector.”
“High mortgage rates are clearly taking a toll on builder confidence and consumer demand, as a growing number of buyers are electing to defer a home purchase until long-term rates move lower,” said NAHB Chief Economist Robert Dietz.
All three HMI components declined in September. The component measuring current sales conditions fell 6 points to 51. The component measuring sales expectations in the next six months declined 6 points to 49, and the component measuring buyer traffic dropped 5 points to 30.
Looking at the three-month moving averages for regional HMI scores, the Northeast fell 2 points to 54, the Midwest dropped 3 points to 42, the South decreased 4 points to 54, and the West posted a 3-point decline to 47.
Read the NAHB release.