Homebuilder sentiment falls again in March

March 17, 2022

Builder sentiment decreased two points to 79 in March as homebuilders face growing expenses and delays, 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, buyer traffic increased two points to 67; current sales conditions fell three points to 86; and sales expectations in the next six months fell 10 points to 70.

This is the fourth straight monthly decline and the first time the index has slipped below 80 since September 2021, when the Delta variant of COVID-19 was spreading.

Although supply chain issues still are affecting homebuilders and causing delays, the expectations of higher interest rates now also are a significant challenge. The average rate on the 30-year fixed-rate mortgage is a full percentage point higher than it was a year ago and continues to rise, which contributed to the index’s steep drop for sales expectations.

“The March HMI recorded the lowest future sales expectations in the survey since June 2020,” said Robert Dietz, NAHB chief economist. “Builders are reporting growing concerns that increasing construction costs (up 20% over the last 12 months) and expected higher interest rates connected to tightening monetary policy will price prospective home buyers out of the market.”

Tags: Residential | Trends


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