The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) declined 4 points to 40 in October, following a downwardly revised September reading. This is the third consecutive monthly drop in builder confidence.
“Builders have reported lower levels of buyer traffic, as some buyers, particularly younger ones, are priced out of the market because of higher interest rates,” said NAHB Chairman Alicia Huey, a custom home builder and developer from Birmingham, Ala. “Higher rates are also increasing the cost and availability of builder development and construction loans, which harms supply and contributes to lower housing affordability.”
“The housing affordability crisis can only be solved by adding additional attainable, affordable supply,” said NAHB Chief Economist Robert Dietz. “Boosting housing production would help reduce the shelter inflation component that was responsible for more than half of the overall Consumer Price Index increase in September and aid the Fed’s mission to bring inflation back down to 2%. However, uncertainty regarding monetary policy is contributing to affordability challenges in the market.”
All three major HMI indices declined in October. The HMI index gauging current sales conditions fell 4 points to 46, the component charting sales expectations in the next six months dropped 5 points to 44, and the gauge measuring buyer traffic dipped 4 points to 26.
Looking at the three-month moving averages for regional HMI scores, the Northeast fell 4 points to 50, the Midwest dropped 3 points to 39, the South fell 5 points to 49, and the West posted a 6-point decline to 41.
Read the NAHB release.
