by NAHB/Wells Fargo Housing Market Index has only posted a lower reading twice since 2012
WASHINGTON — Homebuilder confidence dropped again this month, to what the National Association of Home Builders described as one of the lowest levels for newly constructed single-family homes since 2012.
The NAHB/Wells Fargo Housing Market Index survey released this week had a builder confidence reading of 32, down two points since May. Authors of the report said that the index has only posted a lower reading twice since 2012, including a reading of 31 in December 2022 and a reading of 30 at the start of the pandemic in April 2020, when it dropped 40 points.
Officials said the reading coincides with an increased use of price incentives to sell newly built homes as buyer demand continues to soften. The survey noted that the use of incentives was 62% in June, up one percentage point from May.
“Buyers are increasingly moving to the sidelines due to elevated mortgage rates and tariff and economic uncertainty,” said NAHB Chairman Buddy Hughes, a homebuilder and developer from Lexington, North Carolina. “To help address affordability concerns and bring hesitant buyers off the fence, a growing number of builders are moving to cut prices.”
According to the survey, 37% of builders reported cutting prices in June, which the group said was the highest percentage since it began tracking this figure monthly in 2022. By comparison, 34% of builders reported cutting prices in May and 29% reported doing so in April.
In addition, the survey showed the average price reduction was 5% in June, unchanged every month since this past November.
“Rising inventory levels and prospective home buyers who are on hold waiting for affordability conditions to improve are resulting in weakening price growth in most markets and generating price declines for resales in a growing number of markets,” noted NAHB Chief Economist Robert Dietz. “Given current market conditions, NAHB is forecasting a decline in single-family starts for 2025.”
The latest national data on housing starts and home completions can be found here.
The NAHB has been conducting the monthly survey among builders for more than 35 years. Its research, done in partnership with Wells Fargo, gauges builder perceptions of current single-family home sales and sales expectations for the next six months as good, fair or poor and also asks builders to rate traffic among prospective buyers as high to very high, average or low to very low. It uses scores for each component to calculate a seasonally adjusted index, with any number over 50 indicating that more builders view conditions as good rather than poor.
The NAHB said all three of the major HMI indices posted losses in June:
+ The HMI index gauging current sales conditions fell two points in June to 35.
+ The component measuring sales expectations in the next six months dropped two points to 40.
+ And the gauge charting traffic of prospective buyers declined two points to 21, which officials said is the lowest reading since November 2023.
By region, HMI scores were as follows:
+ The Northeast fell one point to 43.
+ The Midwest rose one point to 41.
+ The South dropped three points to 33.
+ The West declined four points to 28.
HMI tables can be found at nahb.org/hmi. More information on housing statistics is also available at Housing Economics PLUS.
