Any remaining optimism among homebuilders keeps on slipping away as the weakened housing market faces an uncertain future.
The National Association of Homebuilders/Wells Fargo Housing Market Index marked its 10th consecutive monthly drop in homebuilder sentiment. Bloomberg reported the data extend what was already the longest-running decline in data reached in 1985.
Housing sentiment dropped eight points between August and September to 38, half of what it was six months ago. Aside from its early-pandemic nadir in May 2020, September’s data shows the most pessimistic housing sentiment since 2012.
Homebuilders and buyers alike are contending with the highest mortgage rates in 20 years on top of rampant inflation, which cuts budgets and drives construction costs up.
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The homebuilder association in a release on the report blamed the Federal Reserve’s interest rate hikes for going too far in cooling the market.
“High mortgage rates approaching 7% have significantly weakened demand, particularly for first-time and first-generation prospective home buyers,” said NAHB chairman Jerry Konter. “This situation is unhealthy and unsustainable.”
Housing starts, another key measure related to sentiment around the sector, mostly parallelled sentiment’s downward slide this year — except for data published last month showing an unexpected 12 percent jump in new home construction in August.
— Cailley LaPara