U.S. home builder sentiment falls for 10th straight month - NAHB

Applied Energetics

18/10/2022 15:00

Oct 18 (Reuters) - Confidence among U.S. single-family
homebuilders fell for the 10th straight month in October as
soaring mortgage rates and bottlenecks for building materials
made new housing less affordable for many first-time buyers.   
    The National Association of Home Builders/Wells Fargo
Housing Market index dropped eight points to 38 this month. With
the exception of the short-lived plunge during the spring of
2020 when the country locked down during the first wave of
COVID-19, this was the lowest reading since August 2012. A
reading above 50 indicates that more builders view conditions as
good rather than poor.
    Economists polled by Reuters had forecast the index at 43.
    The housing market has seen the most pronounced effects so
far of the Federal Reserve's aggressive interest rate hikes
aimed at quashing the highest inflation in 40 years. Interest
rates on the most popular type of U.S. home loan are nearing 7%
- the highest since 2006 - and sales of new and existing homes
have tumbled by roughly 25% since January. 
    Since March, the U.S. central bank has lifted its benchmark
policy rate from near zero to a range of 3.00%-3.25%, and the
fed funds rate is now expected to end the year in the mid-4%
range with inflation yet to show signs of abating materially.
    The government on Wednesday will publish the September
figures for the number of new homes starting construction and
volumes of permits being issued for new home building projects,
both of which have declined sharply this year. Both are
estimated to have fallen further last month.
    "This will be the first year since 2011 to see a decline for
single-family starts," NAHB Chief Economist Robert Dietz said in
a statement. "And given expectations for ongoing elevated
interest rates due to actions by the Federal Reserve, 2023 is
forecasted to see additional single-family building declines as
the housing contraction continues."
    "While some analysts have suggested that the housing market
is now more 'balanced,' the truth is that the homeownership rate
will decline in the quarters ahead as higher interest rates and
ongoing elevated construction costs continue to price out a
large number of prospective buyers," Dietz said.
    The survey's measure of current sales conditions dropped
nine points to 45. Its gauge of sales expectations over the next
six months slumped 11 points to 35. The component measuring
traffic of prospective buyers fell six points to 25.
 (Reporting by Dan Burns; Editing by Chizu Nomiyama)
 ((daniel.burns@thomsonreuters.com))