Builder Confidence Declines for 9th Straight Month - Modern Distribution Management

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Builder Confidence Declines for 9th Straight Month

Builder confidence in the market for newly built single-family homes fell again in September.
A new home being built with wood, trusses, supports and a foundation.

Builder sentiment fell for a ninth straight month in September, according to a news release from the National Association of Home Builders (NAHB). Elevated interest rates, building material supply chain disruptions and high home prices continue to hamper affordability.

Builder confidence in the market for newly-built single-family homes fell three points in September to 46, the lowest level since May 2014 (excluding spring 2020), according to the NAHB/Wells Fargo Housing Market Index (HMI) released Sept. 19. Twenty-four percent of builders reported reducing home prices in September, up from 19% in August, according to the release.

“Builder sentiment has declined every month in 2022, and the housing recession shows no signs of abating as builders continue to grapple with elevated construction costs and an aggressive monetary policy from the Federal Reserve that helped pushed mortgage rates above 6% last week, the highest level since 2008,” NAHB chief economist Robert Dietz said. “In this soft market, more than half of the builders in our survey reported using incentives to bolster sales, including mortgage rate buydowns, free amenities and price reductions.”

The NAHB/HMI also reported declines in each of the components it uses to gauge builder perceptions of the current market for single-family home sales. Current sales conditions dropped three points to 54, sales expectations in the next six months declined one point to 46 and traffic of prospective buyers fell one point to 31. A score over 50 indicates that more builders view conditions as good than poor.

The three-month moving averages for regional HMI scores also showed declines:

  • Northeast fell five points to 51
  • Midwest dropped five points to 44
  • South fell seven points to 56
  • West posted a 10-point decline to 41

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