by Also, 41% of builders reported cutting prices, a record high, according to the NAHB
WASHINGTON — While the government shutdown has ended, other economic uncertainty in the marketplace kept homebuilder confidence low this month, the National Association of Home Builders reported.
According to the NAHB/Wells Fargo Housing Market Index, builder confidence in the market for newly built single-family homes rose one point to 38, which NAHB described “as firmly in negative territory.”
The latest survey also showed that 41% of builders reported cutting prices in November, which it described as a record high post-Covid and also the first time it has passed 40%. It noted that the average price reduction was 6% in November, unchanged from October, while the use of sales incentives was 65%, also level with September and October.
“While lower mortgage rates are a positive development for affordability conditions, many buyers remain hesitant because of the recent record-long government shutdown and concerns over job security and inflation,” said NAHB Chairman Buddy Hughes, a homebuilder and developer from Lexington, North Carolina. “More builders are using incentives to get deals closed, including lowering prices, but many potential buyers still remain on the fence.”
NAHB Chief Economist Robert Dietz added, “We continue to see demand-side weakness as a softening labor market and stretched consumer finances are contributing to a difficult sales environment.”
He noted that following a decline in single-family housing starts this year, that NAHB is forecasting a slight gain for next year “as builders continue to report future sales conditions in marginally positive territory.”
Survey numbers are based on several key components including builder perceptions of current single-family home sales along with prospective buyer traffic. The scores of these components then are used to calculate a seasonally adjusted index where any number over 50 indicates more builders view conditions as good versus poor. A reading below 50 indicates more builders view conditions as poor versus good.
The NAHB said that the HMI index gauging current sales conditions rose two points to 41, while the index measuring future sales fell three points to 51. The gauge charting traffic of prospective buyers posted a one-point gain to 26.
By region, the activity was as follows:
+ The Northeast rose two points to 48.
+ The Midwest fell one point to 41.
+ The South rose three points to 34.
+ The West rose two points to 30.
The NAHB said that key factors that can impact the HMI are interest rates which affect housing affordability; employment levels, which provide a steady income for people to afford a mortgage payment; material costs, that impact the cost of new construction; and inflationary pressures that also contribute to higher materials costs.
