Mortgage demand is at its peak lowest level since 1997violated self-builder confidence.
In fact, homebuilder sentiment is so bad it’s fallen for the ninth straight month, according to a new study. And it keeps getting worse.
What happened: The National Association of Home Builders is NAHB/Wells FargoNAHB/Wells Fargo out with its September HMI (with preliminary October results), which is a weighted average of three separate component indices:
- Showcase single family sales
- Single family sales for the next six months
- traffic of potential buyers
Each month, a panel of around 900 builders rates the first two on a scale of “good,” “moderate,” or “poor,” and the last two on a scale of “high to very good,” “average,” or “low to.” . very low.”
How bad is it? Homebuilder confidence in the new-build single-family home market fell nine points to 45 in October. That’s the lowest level since May 2014 — excluding spring 2020. (A reading above 50 indicates a favorable outlook; below shows it on A Negative).
- Builder confidence in the market for single-family home sales for the next six months fell nine points to 35 – the lowest level since spring 2012.
- Builder confidence in the market for prospective buyers fell 6 points to 25, the lowest level since summer 2012. In spring 2020 it was 13.
The report comes as affordability is still being negatively impacted by a combination of high interest rates, ongoing disruptions in the building materials supply chain and high home prices.
Also read: 30-year fixed-rate mortgages almost jump to this (not) pretty round number
- On a provisional regional basis, the builders each trust sector is below 50, some more than others for October:
- Northeast: 48
- Midwest: 38
- South: 41
- west: 25
“Housing construction is still slowing and has more downside ahead,” he said Jeffrey Roach, Chief Economist for LPL Financial. “Homebuilders are feeling the effects of slowing demand as higher borrowing costs weigh on prospective homes…
