Confidence among homebuilders remains low as the housing market sees little relief from economic challenges, according to the latest data from the National Association of Home Builders (NAHB).
The NAHB/Wells Fargo Housing Market Index (HMI) for August registered builders’ confidence at a 32, down one point from July and still down from the 50-point mark indicating that more builders view conditions as good than poor. Confidence has hung at the 32 to 34 level since May, and has now been in negative territory for 16 consecutive months.
The HMI index gauging current sales conditions fell one point in August to 35, while the component measuring sales expectations in the next six months remained at 43. The gauge charting traffic of prospective buyers rose two points to 22, but remains low.
“Affordability continues to be the top challenge for the housing market, and buyers are waiting for mortgage rates to drop to move forward,” said NAHB Chairman Buddy Hughes. “Builders are also grappling with supply-side headwinds, including ongoing frustrations with regulatory policies connected to developing land and building homes.”
Looking at the three-month moving averages for regional HMI scores, the Northeast fell one point to 44, the Midwest gained one point to 42, the South dropped one point to 29 and the West declined one point to 24.
NAHB Chief Economist Robert Dietz noted that “housing affordability is central to the outlook for economic growth and inflation.” This has been echoed frequently as of late as many hope for action from the Federal Reserve in the near future, given it declined to cut rates again in July.
Dietz added that with a slowing housing market and other recent economic data, “the Fed’s monetary policy committee should return to lowering the federal funds rate, which will reduce financing costs for housing construction and indirectly help mortgage interest rates.”
For the full report, click here.
