Confidence among US builders in the new single-family home market has fallen to its lowest level in more than 14 years. The NAHB/Wells Fargo Housing Market Index fell three points to 29 in October, the National Association of Home Builders (NAHB) said.
This is the weakest reading for the indicator since June 2012. The index measures builders' assessments of current sales, expected demand over the next six months and visits from potential buyers. A reading below 50 means pessimistic sentiment outweighs positive sentiment.
Interest rates and costs keep buyers out
“Mortgage rates have risen well above 7% in recent weeks, and higher fuel prices and inflation have further dampened buyer traffic across much of the country,“ said NAHB President Bill Owens.
Builders are also facing higher costs for construction loans, materials and diesel, he said. Owens also said more than a third of companies have reported immigration enforcement in their areas in the past month. He said this has led to construction delays and discouraged legitimate workers from reporting to work.
NAHB Chief Economist Robert Dietz said the housing market remains squeezed by supply constraints and serious affordability issues.
“Demand continues, but higher mortgage rates, increased construction costs and weaker consumer confidence are keeping more buyers out of the market,“ Dietz said.Sales and expectations continue to deteriorate
All three major components of the index declined in October. The current sales indicator fell two points to 33. Sales expectations for the next six months fell five points to 32, and the potential buyer traffic index fell five points to 18.
Buyer traffic is at its lowest level since April 2012, with the exception of the start of the pandemic in April 2020. Weaker interest is increasing pressure on builders to use discounts and other incentives.
In October, 43% of builders reduced home prices. This is the highest share for the period 2020-2026. The average reduction remained at 6% for the seventh consecutive month. Meanwhile, 65% of companies offered incentives to buyers, keeping their share above 60% for the 19th consecutive month.
Decline in all U.S. regions
Regional indicators also declined. The Northeast index fell one point to 38, the Midwest index fell three points to 40, and the South index fell one point to 30. The West dropped two points to 26.
The Midwest remains the strongest of the four regions, although its scores also declined. The data outlines a market in which more expensive financing reduces purchasing power, while builders simultaneously incur higher costs for labor, materials, land and credit.
Detailed statistics on average property prices in Bulgaria by city and neighborhood can be seen at imot.bg