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ArlingtonReal EstateHome-builder confidence takes yet another tumble

Home-builder confidence takes yet another tumble

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In another sign that the slowdown in the housing market in not going away soon, builder sentiment fell for the ninth straight month in September as the combination of elevated interest rates, persistent building-material supply-chain disruptions and high home prices continue to take a toll on affordability.

Builder confidence in the market for newly built single-family homes fell three points in September to 46 on a 0-to-100 scale, the lowest level since May 2014 with the exception of the COVID spring of 2020, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).

“Buyer traffic is weak in many markets as more consumers remain on the sidelines due to high mortgage rates and home prices that are putting a new-home purchase out of financial reach for many households,” said NAHB chairman Jerry Konter, a homebuilder and developer from Savannah.

“In another indicator of a weakening market, 24 percent of builders reported reducing home prices, up from 19 percent last month,” Konter said.

“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 percent, the highest level since 2008,” said NAHB chief economist Robert Dietz.

“More than half of the builders in our survey reported using incentives to bolster sales, including mortgage-rate buydowns, free amenities and price reductions,” Dietz noted.

All three HMI components posted declines in September. Current sales conditions dropped three points to 54 on a 0-to-100 scale, sales expectations in the next six months declined one point to 46 and traffic of prospective buyers fell one point to 31.

Looking at the three-month moving averages for regional HMI scores, the Northeast fell five points to 51, the Midwest dropped five points to 44, the South fell seven points to 56 and the West posted a 10-point decline to 41.

HMI tables can be found at nahb.org/hmi.

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