Builder sentiment dropped two points to 35 in June; 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 two points to 38; sales expectations were unchanged at 45; and buyer traffic remained at 25.
Thirty-five percent of builders reported cutting prices in June compared with 32% in May, 36% in April and 37% in March. The average price discount was 6%, which is unchanged from May. Sixty-two percent of builders were using sales incentives other than price cuts to improve sales in June, which is up from 61% in May; this marks the 15th consecutive month the use of sales incentives has exceeded 60%.
“Costly and inefficient regulatory policy is clearly impeding the ability of builders to increase the housing supply,” said NAHB Chief Economist Robert Dietz. “According to a new NAHB study, government regulation, taxes, fees and other costs add more than 26% to the price of an average single-family home. Easing permitting bottlenecks, density limits and inefficient zoning rules would help reduce costs and support the housing growth the nation needs.”
