US homebuilder sentiment fell to a five-month low in September as higher mortgage rates continued to push many prospective buyers out of the market.
(Bloomberg) — US homebuilder sentiment fell to a five-month low in September as higher mortgage rates continued to push many prospective buyers out of the market.
The National Association of Home Builders/Wells Fargo gauge declined 5 points to 45 after sliding 6 points a month earlier. That marked the largest back-to-back decrease in nearly a year. The September reading was below all estimates in a Bloomberg survey of economists.
While builder sentiment had been rising this year through July amid limited resale inventory, mortgage rates above 7% risk choking off demand for new homes. Borrowing costs may remain elevated as Federal Reserve officials have indicated they will keep their benchmark rate high for the foreseeable future.
“High mortgage rates are clearly taking a toll on builder confidence and consumer demand, as a growing number of buyers are electing to defer a home purchase until long-term rates move lower,” NAHB Chief Economist Robert Dietz said in a statement.
Many builders have been resorting to incentives in an effort to lure buyers. Nearly a third of respondents said they lowered prices to bolster sales, the largest share since the end of 2022, according to NAHB. The share of builders offering all types of buyer incentives rose to a four-month high.
All indexes tracked by NAHB posted declines in September. Both current and expected sales measures fell to multi-month lows. A gauge of prospective buyer traffic dropped to the lowest since February.
–With assistance from Jordan Yadoo.
(Adds graphic)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.