Builder sentiment fell three points to 32 in September; 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 four points to 35; sales expectations dropped six points to 37; and buyer traffic was unchanged at 23.
Thirty-eight percent of builders reported cutting prices in September compared with 35% in August; 37% in July; and 35% in June. The average price discount was 6%, which is unchanged from August. Sixty-six percent of builders were using sales incentives other than price cuts to improve sales in September, which is up from 63% in August and marks the 18th consecutive month the use of sales incentives has exceeded 60%.
“Buyer traffic has weakened across much of the country, largely because of rising mortgage rates,” said NAHB Chairman Bill Owens. “Builders also continue to face higher material costs, rising gas and diesel prices and persistent labor shortages. In some markets, builders report that increased immigration enforcement is discouraging legal workers from reporting to job sites.”
