Weakening Builder Confidence Points to Economic Troubles Ahead
Rising inflation and higher mortgage rates are slowing traffic of prospective home buyers and putting a damper on builder sentiment, according to the National Association of Home Builders (NAHB). In a troubling sign for the housing market, builder confidence in the market for newly built single-family homes posted its sixth straight monthly decline in June, falling two points to 67 in the most recent NAHB/Wells Fargo Housing Market Index (HMI). This marks the lowest HMI reading since June 2020.
“Six consecutive monthly declines for the HMI is a clear sign of a slowing housing market in a high inflation, slow growth economic environment,” said Jerry Konter, NAHB chairman and a builder and developer from Savannah, Ga. “The entry-level market has been particularly affected by declines for housing affordability and builders are adopting a more cautious stance as demand softens with higher mortgage rates. Government officials need to enact policies that will support the supply-side of the housing market as costs continue to climb.”