The National Home Builders / Wells Fargo housing market index fell to 69 from 77 in April, its lowest point since June 2020. It is the fifth consecutive month that the index has gone down.
“Building material costs have risen 19% from a year ago, in less than 3 months mortgage rates have risen to a 12-year high,” said NAHB chief economist Robert Dietz . “And under current accessibility conditions, less than 50% of new and existing home sales are affordable for a typical family.”
The housing market index falls to a minimum since June 2020
President Joe Biden released the Housing Supply Action Plan on May 16th. The plan aims to improve the supply of affordable housing over the next 5 years.
“The NAHB has been urging the Administration to pursue this vital national concern for the past few months,” said NAHB President Jerry Kontak. He noted that by the end of April, more than 10,000 representatives of the housing sector had sent letters to Biden asking for a response. “The plan contains many positive elements that would help address a number of affordability challenges and improve funding options.”
“We agree with the White House that the key to meeting the challenges of affordable housing in our country is to build more housing,” Kontak added.
The NAHB / Well Fargo Housing Market Index Report for May
NAHB members are surveyed monthly. They are asked to give an assessment of the market conditions for the sale of single-family homes, both now and in the next 6 months, and a level of confidence in the traffic of potential buyers. Ratings are good, fair or bad. The NAHB calculates the index using a formula that includes seasonal adjustments.
These are the regional numbers in the housing market index:
- Northeast: 76
- Midwest: 51
- South: 76
- West: 73
The average for these four regions is 69.
Is the housing market slowing down?
What does the index indicate? The sharp drop in the index indicates that builders’ confidence is declining. It is also an indication that the housing market is starting to slow down.
According to the NAHB, the continuing decline in the housing market is related to the challenges of affordability: rising interest rates, double-digit price increases for materials, and housing prices (including existing stocks).
For the latest news, follow us on Google News.