Builder sentiment dropped two points to 34 in July; anything below 50 is considered negative for the National Association of Home Builders’ monthly survey, according to NAHB. It reached a record high of 90 in November 2020.
Regarding the three components of the homebuilder index, current sales conditions fell one point to 37; sales expectations dropped two points to 43; and buyer traffic declined two points to 23.
Thirty-seven percent of builders reported cutting prices in July compared with 35% in June, 32% in May and 36% in April. The average price discount was 6%, which is unchanged from June. Sixty-three percent of builders were using sales incentives other than price cuts to improve sales in July, which is up from 62% in June; this marks the 16th consecutive month the use of sales incentives has exceeded 60%.
“Many potential buyers remain on the sidelines as they wait for lower mortgage rates, more certainty on inflation and a clearer economic outlook,” said NAHB Chairman Bill Owens. “The recently enacted 21st Century ROAD to Housing Act contains important provisions on land-use and zoning, regulatory reform and financing tools that address obstacles facing builders and buyers, but these reforms will take time to implement.”
