Homebuilder confidence weakens again but easing rates may brighten the outlook - NAHB

Applied Energetics

16/11/2023 15:00

By Amina Niasse
       NEW YORK, Nov 16 (Reuters) - U.S. home builder
confidence weakened in November despite signs of easing mortgage
rates that could bolster the outlook into the end of the year,
according to a report released Thursday.
    The National Association of Homebuilders’ index of builder
confidence fell to 34 in November from 40 in October. The
six-point fall is the fourth-straight drop in builder
confidence, leaving the index at its lowest since December 2022.
    Confidence could improve in coming months, however, as
mortgage rates that peaked near 8% last month look poised to
decline and credit conditions loosen across the economy.
    "While builder sentiment was down again in November, recent
macroeconomic data point to improving conditions for home
construction in the coming months," said NAHB Chief Economist
Robert Dietz. "In particular, the 10-year Treasury rate moved
back to the 4.5% range for the first time since late September,
which will help bring mortgage rates close to or below 7.5%.
Given the lack of existing home inventory, somewhat lower
mortgage rates will price-in housing demand and likely set the
stage for improved builder views of market conditions in
December."
    The average contract rate on a 30-year fixed-rate mortgage
stood at 7.61% last week after climbing to as high as 7.9% in
October, the highest in more than two decades, according to the
Mortgage Bankers Association. A separate survey from Freddie Mac
showed the average rate was down to 7.5% in the latest week.
    As high rates cut into home affordability, homebuilders have
slashed prices in an effort to attract buyers.
    Homebuilder confidence rose during the first-half of the
year as high mortgage rates and limited inventory of existing
homes drew prospective homeowners to the new construction
market. NAHB's buyer traffic index reached its peak in July at
40 and fell to 21 in November, the lowest since December 2022. 
     Amid weakening traffic, 36% of builders cut home prices in
November, the highest share since November 2022. Builders based
in the South and West reported the largest declines in sales
conditions.

 (Reporting by Amina Niasse; Editing by Chizu Nomiyama)
 ((amina.niasse@thomsonreuters.com;))