As the U.S. economy remains fragile, falling builder confidence marks the latest “worrying sign” of a weak housing market, according to a new report.
Homebuilder confidence fell for the eighth consecutive month in August, losing six points to 49, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released on Monday. The report marks the first time since the start of the pandemic that the index has fallen below 50 points.
In a press release, NAHB President Jerry Konter cited rising construction costs and mortgage rates as the reason for weakened builder sentiment.
Konter added that in “a disturbing sign” that consumers are now forgoing home purchases due to rising housing costs, the index found that the number of August buyer traffic fell to a low. record high since April 2014, except when the pandemic first hit. in the spring of 2020.
Sales of existing homes fell more than 14% from a year ago, according to a July report from the National Association of Realtors.
HMI scores for moving averages fell the most in the West and Northeast, which saw declines of 11 and 9 points, though the lowest three-month average remains in the Midwest at 49 points.
The central bank has shown no signs that it will stop its hawkish moguls, raising the rate another 0.75 percentage points in June and July, the biggest back-to-back increases seen in decades.
“Tightening monetary policy from the Federal Reserve and persistently high construction costs have caused a housing slump,” said NAHB chief economist Robert Dietz.
However, Dietz noted that with the inflation rate near its peak, “long-term interest rates have stabilized”, which he hopes will bring some stability on the demand side. .
Housing prices continued to rise steadily, despite the fall in other key costs such as gasoline prices. Americans facing soaring costs at the pumps finally saw some relief in mid-June as prices began to fall from all-time highs, but a tough economy did not bring other costs down. .
Experts have warned that it is categories like fuel and housing that could have adverse effects on young working families.
“These are bills that you can’t ignore in any given month,” said Victor Claar, associate professor of economics at Florida Gulf Coast University, previously. Newsweek. “You have to feed your kids, if you go to work you have to put gas in that car, and if you don’t want to be evicted, you have to pay that rent.”