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This is a bad sign for the housing market. And a turbulent housing market is a bad sign for the economy.
According to the National Association of Home Builders / Wells Fargo Housing Market Index, published on June 15, builders’ confidence in the newly built family home market is reported for the sixth month in a row. drop to 67 ratings. This is the lowest HMI number since June 2020.
NAHB Housing Market Index - June 2022
Rising inflation and higher interest rates on loans have slowed down the attendance of potential buyers of houses and flats and dampened the mood of builders.
“Six consecutive monthly declines for HMI is a clear sign of a slow housing market in a highly inflationary and slow-growing economic environment,” said NAHB President Jerry Konter. , founder and developer of Savannah, Ga.
“The entry market is particularly affected by declining housing affordability and builders are taking a more cautious stance as demand softens with higher interest rates.
“Government officials need to create a policy that supports the supply side of the housing market because costs are still rising,” Konter added.
Representatives of the NAHB and the US Department of Housing and Urban Development met
At a meeting on July 14 sponsored by the NAHB and the US Department of Housing and Urban Development (HUD), Konter said housing affordability is a top priority for NAHB members and should also be a top priority for lawmakers and officials. HUD Secretary Marcia Fudge voted in favor.
“We need to reconsider housing,” said Minister Fudge. “If we can’t solve the housing crisis now, we will all fail.”
The meeting, held at the National Building Museum in Washington, DC, served as the opening event for the Innovative Housing Showcase, a three-day event at the National Mall that demonstrated new building technologies and housing solutions to make housing accessible. which is newer, stronger, and cheaper for American families.
NAHB chief economist Rob Dietz said housing problems needed to be addressed immediately.
“We have a permanent shortage of housing in the country and construction costs are rising,” Dietz said. “The time to address these issues is now, and we must address them through market-based solutions and changes in government policy.”
Details from the NAHB Housing Market Index Report
According to the report, the challenges in the housing market come from both supply and demand.
“The cost of building materials increased by 19% year-on-year, with the cost of various building inputs increasing, except timber, which has recently declined due to housing delays,” said Dietz.
“In terms of market demand, rising mortgage rates in the first half of 2022 will cost a significant number of future home buyers, as reflected in declining HMI traffic.”
Index of potential buyers at the lowest level since June 2020
All three HMI indices declined in June. The component, which maps traffic to future buyers, has dropped five points to 48, the first time this meter has fallen below the 50 thresholds since thresholds. The following six months have fallen by two points to 61.
Looking at the three-month moving averages for the HMI regional score, the northeast fell by one point to 71, the midwest fell by six points to 56, the south fell by two points to 78 and the west fell by nine points to 74.
How the NAHB HMI survey was conducted
Based on a monthly survey conducted by NAHB for more than 35 years, NAHB / Wells Fargo HMI rates the founder’s views on current single-family sales and sales expectations over the next six months as “good”, “fair” or “bad”. . “
The survey also asked the founders to rate potential buyers as “high to very high,” “average,” or “low to very low.”
The score for each component is then used to calculate a seasonally adjusted index, where any number above 50 means that many builders see conditions as good as bad.
Reference Source: Small Biz Trends
