Homebuilder confidence slides again in Sept

ConDig (19-Sept-22).  US homebuilder confidence continued to drift lower in September as elevated interest rates, lingering material supply chain disruptions and high home prices continue erode affordability, according to the latest Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).

Builder confidence in the market for newly built single-family homes dipped three points in September to 46, the lowest level since May 2014 with the exception of the spring of 2020. It was also the ninth straight month of falls in the index — underlining the negativity currently gripping the US homebuilding sector.

All three HMI components posted declines in September. Current sales conditions dropped three points to 54, sales expectations in the next six months declined one point to 46 and traffic of prospective buyers fell one point to 31.

Looking at the three-month moving averages for regional HMI scores, the Northeast fell five points to 51, the Midwest dropped five points to 44, the South fell seven points to 56 and the West posted a 10-point decline to 41.

“Builder sentiment has declined every month in 2022, and the housing recession shows no signs of abating as builders continue to grapple with elevated construction costs and an aggressive monetary policy from the Federal Reserve that helped pushed mortgage rates above 6% last week, the highest level since 2008,” said NAHB chief economist Robert Dietz.

“In this soft market, more than half of the builders in our survey reported using incentives to bolster sales, including mortgage rate buydowns, free amenities and price reductions.”