Builder sentiment decreased six points to 50 in August after hitting the highest level since July 2022 in July; 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.
Of the homebuilder index’s three components, buyer traffic fell six points to 34; current sales conditions dropped five points to 57; and sales expectations in the next six months decreased four points to 55.
“Rising mortgage rates and high construction costs stemming from a dearth of construction workers, a lack of buildable lots and ongoing shortages of distribution transformers put a chill on builder sentiment in August,” said NAHB chair Alicia Huey.
On Aug. 14, mortgage rates hit 7.24%, and the average rate on the 30-year fixed loan rose more than 7% during the last week of July.
Twenty-five percent of builders reported cutting prices in August, which is up from 22% in July. Additionally, 55% of builders used incentives in August compared with 52% in July.
