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Home Builder Confidence Falls for 12th Consecutive Month

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Home Builder Confidence Falls for 12th Consecutive Month

As rising mortgage rates lead to a sharp drop in homebuyer demand, homebuilder sentiment is falling

December 20, 2022
Home builder holding yellow hard hat
Image: Stock.adobe.com

Home builder confidence has fallen for the 12th month in a row, posting its lowest measure since 2012 thanks to high mortgage rates chipping away at homebuyer demand. Home builder sentiment is considered low when the index falls below 50, and in December, measures of confidence fell 2 points to hit 31, Forbes reports.

As a result, home builders across the U.S. are offering discounts and incentives like mortgage rate buydowns and reductions off of purchase prices in order to motivate interested buyers to pull the trigger on new-home purchases.

The situation isn’t likely to get better in the short term. Inflation has begun to come down in the United States, but it still remains high at 7.1%. This is despite the Fed’s rate policy, which has been the fastest rate of increase experienced since the early 1980’s.

With that in mind, Fed chairman Jerome Powell stated in the most recent press conference, “There’s an expectation really that the services inflation will not move down so quickly, so we’ll have to stay at it,” he said. “We may have to raise rates higher to get where we want to go.”

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