Builder confidence in the market for newly built single-family homes was 34 in July, down two points from an upwardly revised reading of 36 in June, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released today. Sentiment has remained below 40 for 15 consecutive months, the longest such stretch since 2012.
“Many potential buyers remain on the sidelines as they wait for lower mortgage rates, more certainty on inflation and a clearer economic outlook,” said NAHB Chairman Bill Owens, a home builder and remodeler from Worthington, Ohio. “The recently enacted 21st Century ROAD to Housing Act contains important provisions on land-use and zoning, regulatory reform and financing tools that address obstacles facing builders and buyers, but these reforms will take time to implement.”
“With the HMI below 40 for 15 straight months, affordability remains the home building industry’s primary challenge, as elevated mortgage rates, costly land, rising material prices, and persistent skilled labor shortages continue to affect the market,” said NAHB Chief Economist Robert Dietz. “Looking ahead, the newly enacted housing law is a positive step that will help expand housing supply and lower overall housing costs, although more policy change is needed at the state and local level.”
The latest HMI survey also revealed that 37% of builders reported cutting prices in July, up from 35% in June, and 32% in May. Meanwhile, the average price reduction was 6% in July, the same rate as the previous month. The use of sales incentives was 63% in July, up slightly from 62% in June, and marking the 16th consecutive month this share has reached 60% or higher.
Looking at the three-month moving averages for regional HMI scores, the Northeast rose one point to 45, the Midwest rose two points to 45, the South fell one point to 33 and the West fell one point to 26.
Read the NAHB release.
