by This marks the 14th straight month the reading has been below 40, reflecting ongoing concerns over mortgage rates and overall affordability
WASHINGTON — The latest survey on homebuilder sentiment indicates that elevated mortgage rates and affordability issues remain a challenge for the housing market.
This is according to the latest National Association of Home Builders/Wells Fargo Housing Market Index published in June.
According to the survey, builder confidence fell two points to 35 in June, marking the 14th straight month that the reading has been below 40. The last time the reading was this low for so many months was during the 2011-12 foreclosure crisis, the NAHB said.
“With the nation short about 1.2 million homes, builder sentiment will remain soft until barriers are eased and conditions improve for homebuilding,” said NAHB Chairman Bill Owens, a homebuilder and remodeler from Worthington, Ohio.
In addition to movement on a major housing bill, he said, Congress can help by passing the CONSTRUCTS Act to address the construction labor shortage and the Energy Choice Act to prevent state and local bans on natural gas in new homes.
NAHB Chief Economist Robert Dietz said that costly and inefficient regulatory policy continues to impact builders’ ability to boost the supply and affordability of housing.
He cited a new NAHB study that found government regulation, taxes, fees and other costs add more than 26% to the price of an average single-family home.
“Easing permitting bottlenecks, density limits and inefficient zoning rules would help reduce costs and support the housing growth the nation needs,” Dietz added.
A release from the NAHB said that the latest survey also showed 35% of builders reduced prices in June, up from 32% in May, with the average price reduction being 6% in June, the same as May. The report also noted that 62% of builders used sales incentives in June compared with 61% in May and representing the 15th consecutive month it has been 60% or higher.
Other highlights of the report were as follows:
+ The HMI index gauging current sales conditions fell two points to 38 in June.
+ By comparison, the index measuring future sales held steady at 45 and the index charting traffic of prospective buyers also was level at 25.
+ By region, HMI scores were as follows: The Northeast rose two points to 44, the Midwest was level at 43, the South fell two points to 33 and the West fell one point to 27.
The survey, which the NAHB has been conducting for more than 40 years, is based on builder perceptions of single-family home sales and sales expectations for the next six months along with the rate of traffic of prospective buyers. Any number over 50 indicates that more builders view conditions as good versus poor.
The report said that the HMI index gauging current sales conditions fell two points to 38 in June, the index measuring future sales held steady at 45 and the index charting traffic of prospective buyers remained level at 25.
By region, activity was as follows: The Northeast rose two points to 44, the Midwest was level at 43, the South fell two points to 33 and the West fell one point to 27.
HMI tables can be found at nahb.org/hmi. More information on housing statistics is also available at Housing Economics PLUS.
