Reflecting worries about rising interest rates, building material bottlenecks and elevated home prices, the National Association of Home Builders released a report on Tuesday showing a continued deterioration in U.S. homebuilder confidence in the month of October.
The report showed the NAHB/Wells Fargo Housing Market Index slumped to 38 in October from 46 in September. Economist had expected the index to dip to 43.
The housing market index declined for the tenth consecutive month, falling to its lowest reading since August 2012, with the exception of the onset of the pandemic in the spring of 2020.
“High mortgage rates approaching 7% have significantly weakened demand, particularly for first-time and first-generation prospective home buyers,” said NAHB Chairman Jerry Konter.
“This situation is unhealthy and unsustainable,” he added. “Policymakers must address this worsening housing affordability crisis.”
The much bigger than expected decline by the housing market index reflected notable decreases by all three index components.
The sales expectations in the next six months index led the way lower, plunging to 35 in October from 46 in September.
The current sales conditions index also tumbled to 45 in October from 54 in September, while the traffic of prospective buyers index slumped to 25 from 31.
On Wednesday, the Commerce Department is scheduled to release a separate report on new residential construction in the month of September.
New home sales are expected to dive 6.4 percent to an annual rate of 1.475 million, while building permits are expected to decrease by 0.8 percent to an annual rate of 1.530 million.
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