Builder sentiment decreased two points to 77 in April as mortgage rates rise sharply, according to cnbc.com. It reached a record high of 90 in November 2020.
Any reading above 50 indicates a positive market; the National Association of Home Builders/Wells Fargo Housing Market Index had fallen to 30 in April 2020.
Of the homebuilder index’s three components, sales expectations in the next six months increased three points to 73; current sales conditions fell two points to 85; and buyer traffic decreased six points to 60.
Mortgage News Daily reports the average rate on the 30-year fixed mortgage was at about 3.9% at the beginning of March and now is up to 5.15%—the highest rate in more than a decade. Elevated mortgage rates are making high prices for new and existing homes even worse; the median price of a newly built home in February was up more than 10% from the previous year.
“The housing market faces an inflection point as an unexpectedly quick rise in interest rates, rising home prices and escalating material costs have significantly decreased housing affordability conditions, particularly in the crucial entry-level market,” said NAHB Chief Economist Robert Dietz.