U.S. Homebuilder Sentiment Falls To Two-Year Low On Softer Demand
U.S. homebuilder sentiment slid to a two-year low in June as rising inflation and higher mortgage rates weighed on housing demand.
(Bloomberg) -- US homebuilder sentiment slid to a two-year low in June as rising inflation and higher mortgage rates weighed on housing demand.
The National Association of Home Builders/Wells Fargo gauge decreased two points in June to 67, the lowest level since June 2020, figures showed Wednesday. That marked the index’s sixth straight decline.
Homebuilders are facing a widespread slowdown in the housing market. A rapid rise in mortgage rates has crimped affordability and driven a slowdown in home sales in recent months. Meantime, lead times for materials remain long, costs are high and labor is still hard to find.
“The housing market faces both demand-side and supply-side challenges,” Robert Dietz, chief economist at the NAHB, said in a statement. “Residential construction material costs are up 19% year-over-year with cost increases for a variety of building inputs.”
“On the demand-side of the market, the increase for mortgage rates for the first half of 2022 has priced out a significant number of prospective home buyers,” he said.
The group’s gauge of prospective buyer traffic fell five points to 48, the lowest since June 2020. The measure of present sales also declined to a two-year low, and sales expectations for the next six months dropped to the lowest since May 2020.
By region, builder sentiment declined in three of four regions. Sentiment improved in the Midwest.
A separate report earlier this month showed 69% of construction firms reported few or no qualified applicants in May, according to a survey of small businesses by the National Federation of Independent Business.
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