by Factors influencing the results include regulatory pressures on the industry, interest rate levels and materials costs
WASHINGTON — Builder confidence fell in July as the market for new homes has waned despite efforts to make single-family homes more affordable.
According to the most recent National Association of Home Builders/Wells Fargo Housing Market Index, builder confidence in the market fell two points from June to 34. The analysis is based on current single-family home sales, anticipated single-family home sales for the next six months and prospective single-family homebuyer traffic.
Current sales conditions fell one point to 37, while sales expectations for the next six months fell two points to 43 and traffic of prospective buyers fell two points to 23.
Readings over 50 indicate that a majority of builders feel confident about current sales and the near-term outlook for housing. Readings below 50 indicate more builders feel less optimistic about the market for new single-family homes.
Factors that can influence the survey and the market for new homes include regulatory pressures on the construction industry, interest rate levels, employment rates, materials costs and other inflationary pressures that have consumers guarded about how they invest or spend their money.
To help move newly constructed homes, builders continue to offer incentives and/or cut costs. According to the latest survey, 37% of builders cut prices in July, up from 35% in June and 32% in May, with the average price reduction being around 6%, unchanged from June.
Some 63% of those surveyed used sales incentives in July, up slightly from 62% in June. It also was the 16th consecutive month the rate has been 60% or higher, the NAHB said.
How this impacts furniture spending in the months ahead remains to be seen as many prospective homebuyers are watching their overall expenses and the economy closely. Should their confidence mirror that of homebuilders, then the prospects for furniture sales indeed could suffer.
