By Joshua Kirby
Confidence among U.S. housebuilders fell again in September, slipping below the breakeven threshold as high mortgage costs weigh on demand for homes, according to data from the National Association of Home Builders released Monday.
Here are the report's main takeaways:
-- The NAHB's housing-market index, which gauges builder confidence in the market for single-family housing, fell to 45 from 50 in August. This brought the index below the key threshold of 50 for the first time in five months, and suggests mortgage rates above 7% are continuing to weigh on builder confidence.
-- The reading was notably worse than expected by economists' consensus, which forecast only a slight decline to 49.5, according to a poll compiled by The Wall Street Journal ahead of the release.
-- The September survey showed housebuilders are increasingly turning to incentives to support sales. Some 32% reported cutting home prices, rising from 25% in August and reaching the largest proportion since December last year. More than half reported using sales incentives of some form in September.
-- A successive month of declining confidence among builders comes as mortgage rates stay above 7%, hitting buyers' purchasing power, said NAHB Chair Alicia Huey.
"On the supply-side front, builders continue to grapple with shortages of construction workers, buildable lots and distribution transformers, which is further adding to housing affordability woes," said Huey, a developer from Birmingham, Alabama. "Insurance cost and availability is also a growing concern for the housing sector," she said.
-- Alongside the main sentiment gauge, the different components of the index all slid backward in September. The index measuring current sales conditions fell six points to 51, while the component gauging expectations for the next six months fell by the same amount to 49, and the measure of traffic of prospective buyers slipped five points to 30.
-- Sliding confidence is an indicator of rising shelter inflation, said NAHB chief economist Robert Dietz. "High mortgage rates are clearly taking a toll on builder confidence and consumer demand, as a growing number of buyers are electing to defer a home purchase until long-term rates move lower," he said, calling for policies that would allow builders to increase housing supply across the U.S.
Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby
(END) Dow Jones Newswires
09-18-23 1014ET
