Get Breaking Alerts on Stocks Before The Mainstream Media

Stay informed of the biggest news on stocks so you can react before 90% of retail investors.
Email address
We guarantee you to keep your privacy
Connect with us
Financial Press
economic-report:-‘prices-ran-wild-the-past-two-years’:-home-builders-say-‘housing-recession-shows-no-signs-of-abating’
economic-report:-‘prices-ran-wild-the-past-two-years’:-home-builders-say-‘housing-recession-shows-no-signs-of-abating’

Breaking

Economic Report: ‘Prices ran wild the past two years’: Home builders say ‘housing recession shows no signs of abating’

The numbers: The National Association of Home Builders’ (NAHB) monthly confidence index fell 3 points to 46 in September, the trade group said on Monday.

It’s the ninth month in a row that the index has fallen, and excluding the pandemic, the September reading of 46 is the lowest since May 2014.

A year ago, the index stood at 76.

Key details: All three gauges that underpin the overall builder-confidence index fell.

  • The gauge that marks current sales conditions fell by 3 points. 

  • The component that measures prospective-buyer traffic fell by 1 point.

  • The gauge that assesses sales expectations for the next six months fell by 1 point.

All four NAHB regions posted drops in builder confidence. Declines were led by the West, which saw a 10-point drop, followed by the South, with a 7-point drop. The Northeast and the Midwest each saw a 5-point drop.

Big picture: New-home builders are struggling to attract buyers due to high interest rates and home prices.

Mortgage rates rose above 6%, doubling since last year, which has considerably cooled buyer demand.

Meanwhile, home prices continue to be elevated, with the median sales price for a new home at $439,400 in July, according to the U.S. Census Bureau.

Sellers are pulling out all the stops to boost sales. Nearly a quarter of builders, up from 19% the previous month, are dropping prices to attract buyers, the NAHB said. 

Some are even offering free amenities and mortgage rate buydowns. 

What the NAHB said: “Builder sentiment has declined every month in 2022, and the housing recession shows no signs of abating,” said Robert Dietz, the NAHB’s chief economist.

The drop comes as builders are dealing with higher construction costs and mortgage rates have risen to their highest level since 2008.

More than half of the sellers the NAHB surveyed used incentives to lure buyers, Dietz said.

Get Breaking Stock Alerts

Stay informed of the biggest news on stocks so you can react before 90% of retail investors.
Email address
We are Spam free & Secure 🙂

What are they saying? Builder confidence continues to decline, and other data that will be released this week will paint a picture of a struggling sector, one economist noted.

“It’s little surprise that the most interest-sensitive segment of the economy is breaking hard, especially after prices ran wild the past two years, pushing affordability to the worst level in 33 years,” Sal Guatieri, senior economist at BMO Capital Markets, wrote in a note.

Market reaction: The yield on the 10-year Treasury note
TMUBMUSD10Y,
3.545%

rose above 3.48% on Monday morning on expectations of a hawkish Fed meeting this week. While the SPDR S&P Homebuilders ETF
XHB,
-3.05%

traded slightly lower during the morning session, the big home-builder stocks, from D.R. Horton Inc.
DHI,
-2.42%

to Toll Brothers
TOL,
-2.40%

to Lennar
LEN,
-2.75%
,
edged higher.

Written By

Click to comment

Leave a Reply

Your email address will not be published.

Related Articles

Breaking

A Washington state rancher has been sentenced to 11 years in prison for a nearly quarter-billion-dollar ripoff of Tyson Foods Inc. TSN, -1.94% in...

Breaking

The Federal Reserve has been showing no signs of letting up on aggressive rate hikes, even as its policies fuel carnage for the ages...

Breaking

Elon Musk’s satellite internet company, Starlink, will help provide broadband internet access to people in Florida affected by Hurricane Ian. Florida governor Ron DeSantis,...

Breaking

With multiple cracks emerging in global financial markets, the Federal Reserve may be forced to end its aggressive rate hikes “when something breaks” and...

Get Breaking Stock Alerts

Stay informed of the biggest news on stocks so you can react before 90% of retail investors.
Email address
We are Spam free & Secure :)

Get Breaking Stock Alerts

Email address

Get Breaking Stock Alerts

Stay informed of the biggest news on stocks so you can react before 90% of retail investors.
Email address