Builder sentiment fell three points to 29 in October; anything below 50 is considered negative for the National Association of Home Builders’ monthly survey, according to NAHB. It reached a record high of 90 in November 2020.
Regarding the three components of the homebuilder index, current sales conditions fell two points to 33; sales expectations dropped five points to 32; and buyer traffic declined five points to 18.
Forty-three percent of builders reported cutting prices in October—the highest share during the 2020-26 period—compared with 38% in September; 35% in August; and 37% in July. The average price discount was 6%, which is unchanged from September. Sixty-five percent of builders were using sales incentives other than price cuts to improve sales in October, which is down slightly from 66% in September and marks the 19th consecutive month the use of sales incentives has exceeded 60%.
“Housing remains squeezed by supply-side constraints and significant affordability challenges,” said NAHB Chief Economist Robert Dietz. “Demand persists, but higher mortgage rates, elevated construction costs and weaker consumer confidence are keeping more buyers on the sidelines. As a result, buyer traffic has fallen to its lowest level since April 2012, excluding the pandemic’s onset in April 2020.”
