Homebuilder sentiment falls to a two-year low in May

May 18, 2022

Builder sentiment decreased eight points to 69 in May, falling to a two-year low amid higher mortgage rates and building material costs, 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 decreased 10 points to 63; current sales conditions fell eight points to 78; and buyer traffic decreased nine points to 52.

Mortgage News Daily reports the average rate on the 30-year fixed mortgage jumped from 4.88% to 5.41% in April and hit a high of 5.64% during the first week of May.

“The housing market is facing growing challenges,” said NAHB Chief Economist Robert Dietz. “Building material costs are up 19% from a year ago; in less than three months, mortgage rates have surged to a 12-year high; and based on current affordability conditions, less than 50% of new and existing home sales are affordable for a typical family.”

Tags: Residential | Trends

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