High mortgage rates averaging 6.92% in June continue to dampen builder confidence, with the NAHB/Wells Fargo Housing Market Index for single-family homes dropping to 42 in July. Despite this, builders expect mortgage rates to decrease later this year as inflation shows signs of easing. The survey also noted that 31% of builders cut home prices in July, while sales incentives remained steady. Regional HMI scores saw declines across all regions.
Builder confidence in the US housing market has risen for the first time in 11 months, according to the National Association of Home Builders (NAHB). The Wells Fargo housing market index reading rose to 55 from 50, marking the sixth consecutive month that sentiment improved and the first time it surpassed the midpoint of 50 since July last year. The uptick in home builder sentiment reflects growing foot traffic from homebuyers, light competition from resale, and a better supply chain. However, access to builder and developer loans has become more difficult to obtain over the last year, which will ultimately result in lower lot supplies as the industry tries to expand off-cycle lows.
Builder confidence in the housing market has reached positive territory for the first time in 11 months, according to the National Association of Home Builders/Wells Fargo housing market index update. The newfound enthusiasm reflects robust foot traffic from homebuyers, little competition from the resale side, and an improved supply chain. Elevated mortgage rates are also helping builders on the supply side by limiting the number of homeowners who are willing to sell in these market conditions. However, project financing remains a headwind, especially after the failure of several regional banks this year roiled markets.
Homebuilder sentiment in the US rose for the fourth consecutive month in April, as low inventory and declining mortgage rates boosted demand for new homes. The National Association of Home Builders/Wells Fargo's gauge of builder sentiment rose one point to 45, reflecting general caution among builders as we head into the heart of housing's spring selling season. However, the measure of current sales conditions increased in April and sales expectations for the next six months rose, marking the first time these components of the report came in above 50 since June 2022.
Despite high mortgage rates and inflation, homebuilders in the US are feeling better about their business as demand for new homes continues to rise. The National Association of Home Builders/Wells Fargo Housing Market Index rose two points to 44 in March, marking the third straight monthly increase in builder sentiment. However, builders remain concerned about the near- and medium-term outlook due to recent instability concerns in the banking system and volatility in interest rates. Additionally, 40% of builders currently characterize lot availability as "poor," which may be further constrained by the banking stress.
