by calculated risks 11/16/2022 10:07:00 AM
The National Association of Home Builders (NAHB) reported that the Housing Market Index (HMI) was at 33, down from 35 last month. Any number below 50 indicates that more builders view sales conditions as bad than good.
From the NAHB: Construction Confidence Has Fallen for 11 Consecutive Months as Housing Continues to Be Weak
Rising interest rates, stubbornly rising building materials costs, and declining affordability terms driving more buyers to the sidelines continue to dampen construction sentiment.
Building confidence in the market for newly built single-family homes posted its 11th consecutive monthly decline in November, dropping five points to 33.According to the National Association of Home Builders (NAHB) / Wells Fargo Housing Market Index (HMI) released today. This is the lowest confidence reading since June 2012, excluding the start of the pandemic in the spring of 2020.
“High interest rates have significantly dampened demand for new homes as buyer movement has become increasingly scarce,” said NAHB Chairman Jerry Konter, a homebuilder and developer from Savannah, Georgia. Housing is in the doldrums, the Biden administration and businesses are new. Congress must shift its focus to policies that lower the cost of construction and allow the nation’s homebuilders to expand housing production.”
To bring more buyers into the market, 59% of builders reported using incentives, with a significant increase in usage from September to November. For example, in November, 25% of construction companies said they pay buyers points, up from 13% in September. Mortgage purchases increased from 19% to 27% over the same time frame. And the 37% of construction companies cut prices in November, up from 26% in September, with an average price down 6%. That’s still well below the rate cuts of 10% to 12% during the Great Recession in 2008.”
All three HMI components posted a decline in November. Current sales conditions fell six points to 39, sales forecasts for the next six months fell four points to 31 and potential buyer traffic dropped five points to 20.
Looking at three-month moving averages of regional HMI results, the Northeast fell six points to 41, the Midwest fell two points to 38, the South fell seven points to 42 and the West recorded a five-point drop to 29.
Click on the chart for a larger image.
This graph shows the NAHB index since January 1985.
This was lower than agreed expectations, and the lowest level since 2012 (excluding a two-month decline at the start of the pandemic).
Potential Buyers Movement is now well below the break-even point of 20 (down from 50).