Builder sentiment decreased four points to 40 in October, hitting a 10-month low; anything below 50 is considered negative for the National Association of Home Builders’ monthly survey, according to CNBC. It reached a record high of 90 in November 2020.
All three components of the homebuilder index declined, with current sales conditions dropping four points to 46; sales expectations in the next six months decreasing five points to 44; and buyer traffic falling four points to 26.
“Builders have reported lower levels of buyer traffic, as some buyers, particularly younger ones, are priced out of the market because of higher interest rates,” said NAHB Chairman Alicia Huey. “Higher rates are also increasing the cost and availability of builder development and construction loans, which harms supply and contributes to lower housing affordability.”
The average rate on the 30-year fixed loan has been more than 7% for two months.
Thirty-two percent of builders reported cutting prices in October, which is unchanged from September but still the highest rate since December 2022, when it was 35%. The average price discount is holding at 6%.
