United States homebuilder sentiment declined in August due to still-high mortgage rates, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index.
The index slipped from 33 in July to 32 in August, matching its lowest since December 22.
“Affordability continues to be the top challenge for the housing market and buyers are waiting for mortgage rates to drop to move forward,” said NAHB Chairman Buddy Hughes.
“Builders are also grappling with supply-side headwinds, including ongoing frustrations with regulatory policies connected to developing land and building homes.”
The Housing Market Index has remained between 32 and 34 since May, with builder sentiment having been negative for 16 consecutive months. Mortgage rates are now at 6.58%, according to Freddie Mac’s weekly average, the lowest rate since October.
All regional Housing Market Index scores fell by one point except for the Midwest, which increased by one point to 42. The West’s score was the lowest, at 24.
Price reductions were 5% in August, and have been at this rate since November. The use of sales incentives was at 66%, rising from 62% in the previous month.
According to the NAHB’s survey, 37% of builders supported cutting prices in August. This is a slight drop from the 38% seen in July, though this percentage has been at 37% or 38% for the last three months.
Sales expectations in the next six months were at 43, stable from July. Prospective buyer foot traffic increased by two points to 22.
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