The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) declined 6 points to 45 in May. This is the first time the sentiment level has declined since November 2023.
“The market has slowed down since mortgage rates increased and this has pushed many potential buyers back to the sidelines,” said NAHB Chairman Carl Harris, a custom home builder from Wichita, Kan. “We are also concerned about the recent codes rules that require HUD and USDA to insure mortgages for new single-family homes only if they are built to the 2021 International Energy Conservation Code. This will further increase the cost of construction in a market that sorely needs more inventory for first-time and first-generation buyers.”
“A lack of progress on reducing inflation pushed long-term interest rates higher in the first quarter and this is acting as a drag on builder sentiment,” said NAHB Chief Economist Robert Dietz. “The last leg in the inflation fight is to reduce shelter inflation, and this can only occur if builders are able to construct more attainable, affordable housing.”
The HMI Index charting current sales conditions fell 6 points to 51, the component measuring sales expectations in the next six months fell 9 points to 51 and the gauge charting traffic of prospective buyers declined 4 points to 30.
Looking at the three-month moving average for regional HMI scores, the Midwest increased 3 points to 49, the Northeast fell 2 points to 61, the South dropped 2 points to 49 and the West posted a 4-point decline to 43.
Read the NAHB release.
