WASHINGTON- Confidence among US single-family homebuilders fell for the ninth straight month in September as soaring mortgage rates and persistently high prices for building materials made new housing less afforda ble for many first-time buyers.
The National Association of Home Builders/Wells Fargo Housing Market index dropped three points to 46 this month. Discounting the plunge during the spring of 2020 when the economy was reeling from the first wave of COVID-19, this was the lowest reading since May 2014. A reading below 50 indicates that more builders view conditions as poor rather than good.
Economists polled by Reuters had forecast the index at 47.
The Federal Reserve’s aggressive monetary policy tightening has had a significant impact on the housing market, compared to the labor market and consumer spending, where demand remains fairly strong.
The US central bank is expected to raise its policy rate by 75 basis points on Wednesday for the third time since June. Since March, the Fed has lifted that rate from near zero to its current range of 2.25 percent to 2.50 percent.
Mortgage rates have surged even higher. The 30-year fixed mortgage rate averaged 6.02 percent last week from 5.89 percent in the prior week, breaking above 6 percent for the first time since November 2008, according to data from mortgage finance agency Freddie Mac.
“Buyer traffic is weak in many markets as more consumers remain on the sidelines due to high mortgage rates and home prices that are putting a new home purchase out of financial reach for many households,” said NAHB Chairman Jerry Konter.
“In another indicator of a weakening market, 24 percent of builders reported reducing home prices, up from 19 percent last month.”
The NAHB also noted that endless disruptions in the supply chain for building materials continued to take a toll, adding that “more than half of the builders in our survey reported using incentives to bolster sales, including mortgage rate buydowns, free amenities and price reductions.”
