by calculated risk May 15, 2024 10:00:00 AM
According to the National Association of Home Builders (NAHB), the Housing Market Index (HMI) was 45, down from 51 the previous month. A number below 50 indicates that more builders see sales conditions as worse than good.
From NAHB: Mortgage interest rates rise in May, hammer builder confidence
Mortgage rates have averaged above 7% for the past four weeks, and builder sentiment has fallen for the first time since November 2023, according to Freddie Mac data.
Builder confidence in the new single-family home market was 45 in May.The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released today shows a decline of 6 points from April.
“The market has slowed since mortgage rates rose, and this has forced many potential buyers to the sidelines,” said Carl Harris, chairman of NAHB, a custom home builder in Wichita, Kansas. “We are also concerned about recent residential building regulations that require: HUD and USDA will insure mortgages on new single-family homes only if they are built to the 2021 International Energy Conservation Code. In a market that desperately needs more inventory for first-time and first-generation buyers, this will further increase construction costs. ”
“Long-term interest rates rose in the first quarter due to a lack of progress in controlling inflation, which is weighing on builder sentiment,” said Robert Dietz, chief economist at NAHB. “The last resort in the fight against inflation is to reduce shelter inflation, but this can only happen if builders can build more accessible and affordable housing.”
The May HMI survey also revealed that 25% of builders reduced house prices to promote sales in May, ending a four-month streak of declines in this index. However, the average price reduction rate in May remained unchanged at 6% for the 11th consecutive month. Meanwhile, the utilization rate of sales incentives rose from 57% in April to 59% in May.
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All three HMI constituent indexes declined in May. The HMI index, which measures current sales in May, fell six points to 51, the component that measures sales expectations for the next six months fell nine points to 51, and the gauge that measures prospective buyer traffic fell four points. It became 30.Looking at the three-month moving average of HMI scores by region, the Midwest increased by 3 points to 49, the Northeast decreased by 2 points to 61, the South decreased by 2 points to 49, and the West decreased by 4 points to 43. It became.
Emphasis added
Click on the graph to see a larger image.
This graph shows the NAHB index since January 1985.
This was below consensus expectations.
