Increasing interest rates since the end of August priced a large number of prospective buyers out of the market, dampening builder views of market conditions in November, according to the National Association of Home Builders' Eye on Housing. In addition, higher short-term interest rates meant increased costs for financing for builders and land developers, adding another hurdle for builders seeking to take advantage of a housing market low on resale inventory.
Builder confidence in the market for newly built single-family homes in November fell six points to 34 in November, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This is the fourth consecutive monthly drop in builder confidence, as sentiment levels have declined 22 points since July and are at their lowest level since December 2022. Also of note, nearly the entire HMI data for November was collected before the latest Consumer Price Index was released and showed that inflation is moderating. ...
While builder sentiment was down again in November, recent macroeconomic data point to improving conditions for home construction in the coming months. In particular, the 10-year Treasury rate moved back to the 4.5% range for the first time since late September, which will help bring mortgage rates close to or below 7.5%. Given the lack of existing home inventory, somewhat lower mortgage rates will price-in housing demand and likely set the stage for improved builder views of market conditions in December.
Advertisement
Related Stories
Labor + Trade Relations
Which States Have the Highest Wages for Construction Workers?
Data show that construction workers in the Northeast and on the Pacific coast have some of the highest hourly earnings, while earnings in construction grew faster in the southern states
Economics
Housing Share of GDP in Q1 2024 Rises Above 16%
The increase marks the first time GDP has surpassed 16% since 2022
Sustainability
Which Green Building Practices Are Home Builders Using Most?
A recent report reveals which green-building practices are most popular among single-family home builders and remodelers