Confidence among U.S. home builders slipped for the fourth straight month to its lowest point of the year in August as high loan rates and
An index of housing market conditions from the National Association of Home Builders and Wells Fargo fell 2 points to 39 this month from its revised July level. That trailed the median estimate of economists surveyed by Bloomberg, who expected a level of 43.
The data indicate downbeat views on present conditions, but a more optimistic take on the outlook. Measures of prospective-buyer traffic and of present sales both fell to new low points for 2024, while a gauge of sales expectations for the next six months climbed 1 point to 49. That may reflect expectations that mortgage rates are set to fall, NAHB Chief Economist Robert Dietz said in a prepared statement.
"With current
New-home sales have held up better than existing-home sales this year, even after dropping in the last couple months, as many builders cut prices or bought down consumers' mortgage rates to make deals. And shares of publicly traded builders have outperformed the broader market. The iShares US Home Construction ETF, comprised of builders and related companies, is up 28% from a year ago, compared to a 21% gain in the S&P 500 Index.
This month, 33% of builders reported cutting prices, higher than the 31% who did so in July and the highest this year, according to NAHB. The average price reduction remained at 6% for the 14th month. The share of builders reporting using sales incentives, at 64%, was the highest since April 2019.
Mortgage rates, which track U.S. government securities, have dropped from last year's highs on prospects the Fed will start cutting interest rates in September from their current two-decades high. Thirty-year mortgage rates fell to just above 6.5% this month, back to May 2023 levels, although still way above their pre-pandemic levels.
Builder sentiment in August fell in the Northeast and the South, and was unchanged in the West and Midwest.
The government will provide a look at housing starts on Friday when it releases new residential construction data for July.
