The growing mortgage rates and uncertainty in the wider economy continue to weigh consumers and as a result of the country’s home builders.
Builder sentiment in June fell 32 points from 32 points since May, down by the National Association of Housing Builders (NAHB)/Wells Fargo Housing Market Index (HMI). Anything below 50 is considered negative. Index was 43 years old in June 2024.
Analysts were hoping for a slight improvement given the recent tariff negotiations and pullbacks by the Trump administration.
The index only looked at two readings, two times, than the 2012-June level, after mortgage rates surged from record lows in 2020 at the start of the pandemic and at the start of the pandemic.
Of the three components of the index, current sales terms fell 2 points to 35, with sales forecasts falling 40 points to 2 points for the next six months, and buyer traffic falling to 21, the lowest reading of metrics since the end of 2023.
“Buyers are increasingly moving on the sidelines due to rising mortgage rates and tariffs and economic uncertainty,” said Buddy Hughes, NAHB chairman and housing builder in Lexington, North Carolina. “More and more builders are moving to lower prices to address affordability concerns and pull hesitant buyers off the fence.”
In a June survey, 37% of builders said they had lowered their prices. This is the highest share since NAHB began tracking monthly metrics three years ago. This is up from 34%, which reported a price cut in May and reported 29% in April. The average price reduction was 5%, and has been stable since the second half of last year.
“We’re looking forward to seeing you in the process of NAHB’s Chief Economist,” said Robert Dietz. “Given the current market situation, NAHB is projecting a decline in detached homes in 2025.”
Reports continue to earn quarterly Renalone of the largest home builders in the nation, with average home prices falling almost 9% in the second quarter from the same quarter in 2024. Guidance on new orders and delivery also fell below analysts’ expectations.
“High mortgage interest rates and continued to weaken consumer confidence, which allowed for affordability and encouraged sales to allow consumers to buy their homes,” said Stuart Miller, CEO, Rennar.
Regionally, the south and west showed the weakest builder sentiments on the three-month moving average. These are the areas where most homes are built.
