Confidence in the housing market among homebuilders has dropped to its lowest point in more than two years, another sign the market is cooling amid rising interest rates and rising prices.
The National Association of Home Builders/Wells Fargo Housing Market Index dropped eight points to 60, considerably more the single point drop expected by economists, according to Bloomberg.
The Federal Reserve has hiked the benchmark borrowing rate quicker this year than was expected, which has sent mortgage rates to recent highs and has slowed mortgage applications.
NAHB chief economist Robert Dietz called on policymakers to consider homebuilder confidence when crafting economic policy.
“Rising mortgage interest rates in recent months coupled with the cumulative run-up in pricing has caused housing demand to stall,” he said. “Given that housing leads the economy, policymakers need to focus more on residential market conditions.”
The Federal Reserve last raised the federal benchmark borrowing rate in September and is expected to raise it again in December, which would be the fourth hike in a year, one more than initially expected.
Shares for homebuilding companies fell and yields on 10-year Treasury bonds dipped following the release of the report. The sub-indexes for measuring current sales and prospective buyer traffic fell by seven and eight points, respectively, to their lowest points since August 2016.
President Trump’s tariffs on foreign goods also dented the market, market pros said, especially those on Canadian lumber and imported steel. [Bloomberg] — Dennis Lynch