U.S. home builder confidence falls to lowest since January

Applied Energetics

17/10/2023 15:00

By Amina Niasse
       NEW YORK, Oct 17 (Reuters) - Homebuilder confidence fell
in October to the lowest levels since January, according to a
report released Tuesday, signaling sky-high mortgage rates are
weighing on construction firm optimism and potential buyer
traffic.
    The confidence index fell for the third-straight month to 40
from a revised September reading of 44, the National Association
of Homebuilders (NAHB)/ Wells Fargo report said. The figure is
also below a Reuters poll showing economist expectations of an
unchanged index of 44.
    “Builders have reported lower levels of buyer traffic, as
some buyers, particularly younger ones, are priced out of the
market because of higher interest rates,” said NAHB Chairman
Alicia Huey. “Higher rates are also increasing the cost and
availability of builder development and construction loans,
which harms supply and contributes to lower housing
affordability.”
    Builder sentiment began sliding in August, the same month
where rates on home loans reached above 7%. Amid the Federal
Reserve’s rate-hike campaign, mortgage rates have steadily risen
since last year, now remaining at a two-decade high.
    Demand for new homes was bolstered during the first half of
2023 as high rates discouraged homeowners from selling, limiting
inventory and lifting the appeal of new construction. Buyer
traffic peaked in July at 40, falling to 26 in October, the
lowest since January.
    Builders slashed prices again this month in an effort to
increase affordability for buyers and boost sales, with 32% of
builders cutting prices in October. Another index tracking
present sales conditions fell 4 points to 46, with the six-month
sales outlook falling to 44 from 49 the month prior.

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