Builders and Prospective Home Buyers Losing Confidence in the Market, according to National Association of Home Builders Report

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During what is the high point of the housing construction season in the US, builders do not feel optimistic. In fact, according to the National Housing Builders Association / Wells Fargo Housing Market Index, builders ’confidence in the newly built single-family housing market recorded its seventh consecutive monthly decline in July , falling 12 points to 55.

It is one of the biggest one-month falls in the 35-year history of the HMI and the lowest reading in the HMI since May 2020. The HMI fell 42 points in April 2020 .High inflation and rising interest rates are drastically slowing sales and buyer traffic. which slows down the housing market.

NAHB / Wells Fargo Housing Market Index – July 2022

NAHB President Jerry Konter cited the same issues that have been challenging the construction market for many months. “Bottlenecks in production, rising housing construction costs and high inflation are causing many builders to halt construction because the cost of land, construction and financing exceeds the market value of the house, ”Konter said. “In another sign of a softer market, 13% of builders in the HMI survey reported that they lowered house prices over the last month to increase sales and / or limit cancellations. lations “.

Higher prices are charging many off the market

“Affordability is the biggest challenge facing the housing market,” said NAHB chief economist Robert Dietz. “Significant segments of the home-buying population have an out-of-market price. Policy makers need to address supply issues to help builders produce more affordable housing.”

Derived from a monthly survey that NAHB has conducted for more than 35 years, the NAHB / Wells Fargo HMI assesses builders ’perceptions of current single-family home sales and sales expectations for the next six months as“ good “,” just “or” poor. ” The survey also asks builders to rate potential buyers ’traffic as“ high to very high, ”“ medium, ”or“ low to very low. ” The scores for each component are then used to calculate a seasonally adjusted index where any number greater than 50 indicates that more builders consider the conditions to be good than bad.

The three components of the HMI fell in July: current sales conditions fell 12 points to 64, sales expectations in the next six months fell 11 points to 50 and potential buyer traffic fell 11 points to 37.

If we look at the three-month moving averages for HMI regional scores, the Northeast fell six points to 65, the Midwest dropped four points to 52, the South fell eight points to 70, and the west recorded a decline of 12 points to 62.

HMI tables can be found at There is also more information on housing statistics available at Housing Economics PLUS (formerly

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Image: Depositphotos

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