Confidence among United States homebuilders weakened further in June as elevated mortgage rates, rising construction costs and affordability challenges continued to weigh on the housing market.
The NAHB/Wells Fargo Housing Market Index (HMI), which measures builder confidence in the market for newly built single-family homes, fell to 35 in June from 37 in May, slightly below market expectations of 36.
The decline marked the 14th consecutive month that builder sentiment has remained below 40, the longest such stretch since the housing downturn associated with the foreclosure crisis in 2011 and 2012.
The survey showed current sales conditions falling two points to 38.
Sales expectations for the next six months were unchanged at 45, while prospective buyer traffic remained at a subdued 25.
Industry leaders said a shortage of available housing, combined with regulatory hurdles and labour constraints, continues to hamper efforts to increase supply.
“With the nation short about 1.2 million homes, builder sentiment will remain soft until barriers are eased and conditions improve for home building,” said NAHB Chairman Bill Owens, a home builder and remodeler from Worthington, Ohio.
“Congress can help by passing the major housing package now before the Senate, along with the CONSTRUCTS Act to address the construction labour shortage and the Energy Choice Act to prevent state and local bans on natural gas in new homes.”
Builders continue to face significant cost pressures despite efforts to increase housing supply.
“Costly and inefficient regulatory policy is clearly impeding the ability of builders to increase the housing supply,” said NAHB Chief Economist Robert Dietz.
“According to a new NAHB study, 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.”
The survey also showed builders increasingly turning to discounts and incentives to attract buyers.
Some 35% of builders reported cutting prices in June, up from 32% in May and the highest proportion in several months. The average price reduction remained unchanged at 6%.
Meanwhile, the use of sales incentives increased slightly to 62% from 61% in May, marking the 15th consecutive month in which more than 60% of builders offered incentives to support sales activity.
