Builder sentiment decreased three points to 46 in September; anything below 50 is considered negative for the National Association of Home Builders’ monthly survey, according to cnbc.com. It reached a record high of 90 in November 2020.
The drop marks the ninth straight decline for the NAHB/Wells Fargo Housing Market Index.
Of the homebuilder index’s three components, current sales conditions fell three points to 54; sales expectations in the next six months decreased one point to 46; and buyer traffic fell one point to 31.
Homebuilders said rising rates have caused sentiment to fall, and nearly a quarter of homebuilders reported lowering prices as rates surged. Home prices have been climbing since the start of the pandemic, and the average rate on the 30-year fixed mortgage is more than twice what it was at the beginning of 2022.
“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.
Homebuilders continue to report elevated construction costs; higher costs for land, labor and materials have made it more difficult for builders to lower prices, though they now are being forced to do so.
“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,” said NAHB Chief Economist Robert Dietz.
