US homebuilder sentiment unexpectedly declined in August for the first time this year as high mortgage rates deterred prospective buyers.
(Bloomberg) — US homebuilder sentiment unexpectedly declined in August for the first time this year as high mortgage rates deterred prospective buyers.
The National Association of Home Builders/Wells Fargo gauge decreased six points to a three-month low of 50. The figure was below all estimates in a Bloomberg survey of economists.
Builder confidence had been on a tear this year as homeowners, reticent to move and relinquish their low borrowing costs, have kept resale inventory limited and encouraged buyers to seek out new construction. The latest figures suggest high mortgage rates — more than double where they were at the end of 2021 — are starting to bite into that demand.
“Rising mortgage rates and high construction costs stemming from a dearth of construction workers, a lack of buildable lots and ongoing shortages of distribution transformers put a chill on builder sentiment in August,” NAHB Chairman Alicia Huey said in a statement.
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After months of having the upper hand, higher rates are also causing more builders to use sales incentives to attract buyers. Sentiment fell across all four major US regions.
The indexes of current sales and prospective buyer traffic both decreased for the first time this year, while the expected sales gauge declined to the lowest level since April.
Data on July housing starts and building permits are due Wednesday.
–With assistance from Jordan Yadoo.
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