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According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), unless the COVID-19 pandemic begins in the spring, homebuilder confidence fell in November to the lowest level since June 2012. 2020 . ) report, released on Wednesday.
Builder sentiment in the new single-family home market ended Nov. 33 down 5 points from October, less than half of what it was six months ago. This decline marks the 11th consecutive month of declines.
The NAHB/HMI report is based on a monthly survey of NAHB members, asking respondents to assess current market conditions for new home sales, expected conditions over the next six months and potential new home buyer movements.
Scores for each component of the survey are used to calculate the index, and numbers above 50 indicate that most homebuilders view terms favorably rather than terms unfavorably.
NAHB President Jerry Conter said high interest rates significantly dampened demand for new homes as the flow of buyers continued to slow.
Experts also attribute the decline in reliability to rising costs and reduced availability of construction materials.
59% of builders surveyed said they use incentives to attract more buyers. The main incentives include the payment of buyer points, used by 25% of builders. 27% of builders say they use mortgage discounts.
Discounts used by 37% of builders. According to the NAHB, the average price decline was 6 percent, about half of the 10-12 percent price decline during the Great Recession of 2008. To reverse this “housing decay,” NAHB urges policymakers to take action.
NAHB Chief Economist Robert Dietz said construction costs, labor costs and materials, particularly concrete, are still not keeping pace with falling home prices.
To address the deepening affordability crisis, policymakers must find solutions that create more affordable and livable housing. There are signs of moderate inflation, including a slowdown in rate hikes by the Federal Reserve and a reduction in regulatory spending related to land development and housing construction.
Three other indexes tracked by the NAHB fell in November. The index of current sales conditions fell 6 points from the previous month to 39, while the component looking at sales forecasts over the next six months fell 4 points to 31. The index, which measures traffic from potential buyers, fell 5 points to 20 points.
Regionally, the 3-month moving average of HMI scores fell across all four regions to 38 in the Midwest, 42 in the South, 29 in the West, and 41 in the Northeast.
Another study, the BTIG/HomeSphere State of the Industry Report, also found a significant decline in forecasts for homebuilders.
According to the survey, 71 percent of builders reported a year-over-year sales decline last month, and 70 percent reported a year-over-year traffic decline in October. Both statistics are voting records.
The BTIG/HomeSphere study is an electronic survey of approximately 50-100 small and mid-sized homebuilders across the country who sell an average of 50-100 homes per year. In October, 121 respondents participated in the survey.
The situation continued to deteriorate in October, according to BTIG analyst Carl Reichardt, due to higher mortgage rates, fears of falling property values, eroding consumer confidence in the economy and a slower response by some private builders to adverse conditions. . seasonal effect. BTIG analyst Carl Reichardt said in a statement.
Reference Source: Housing Wire
