Homebuilder confidence falls to its lowest since 2012
The October index fell to 29 as mortgage rates and building costs squeezed the market.
More homebuilders are cutting prices, but buyers are still holding back. Builder confidence fell three points to 29 in October, its lowest reading since June 2012, according to the National Association of Home Builders and Reuters. The NAHB/Wells Fargo Housing Market Index measures conditions for newly built single-family homes.
The squeeze is coming from both sides. NAHB said higher mortgage rates, energy and material costs, and worsening labor and lot conditions weighed on builders. Reuters also reported that higher borrowing costs and construction expenses were depressing the market. Per NAHB, an index reading above 50 means more builders see conditions as good than poor.
Price cuts are becoming more common: 43% of builders reported cutting prices in October, the highest share in the 2020-2026 period, while the average reduction held at 6%. Sales incentives were used by 65% of builders.
All three parts of the survey weakened. Current sales fell two points to 33, expectations for sales over the next six months dropped five points to 32, and prospective buyer traffic fell five points to 18. That last measure is the lowest since April 2012 if the pandemic's onset in April 2020 is excluded, according to NAHB and Reuters.
