US homebuilder sentiment extends year’s decline as rates rise
US HOMEBUILDER sentiment weakened in November by more than forecast, hitting the lowest level in a decade when excluding the immediate onset of the pandemic.
The National Association of Home Builders (NAHB)/Wells Fargo gauge decreased 5 points to 33 this month, figures showed on Wednesday (Nov 16). The median estimate in a Bloomberg survey of economists called for a reading of 36.
Sentiment has fallen every month this year, extending what was already the longest stretch of declines in data back to 1985.
The housing market, which is especially susceptible to higher borrowing costs, has been among the first sectors to feel the impact of the Federal Reserve’s (Fed) tightening campaign.
“Higher interest rates have significantly weakened demand for new homes as buyer traffic is becoming increasingly scarce,” NAHB Chairman Jerry Konter said in a statement.
All three sentiment components posted declines this month. A measure of future sales slid 4 points to 31, the lowest in a decade, while indexes of current sales and prospective buyer traffic weakened to the softest levels since April 2020.
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Builder sentiment in the West increased, while all other regions fell.
In an effort to tame decades-high inflation, the Fed’s actions have helped push up mortgage rates to their highest levels in two decades. That risks causing house prices to tumble as much as 20% in the near future, according to research from the Dallas Fed.
Meanwhile, Americans are seeing the worst home buying conditions in a generation, with a majority of consumers not planning on moving in the coming year. BLOOMBERG
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