Main Topic: Decline in builder sentiment in the homebuilding market due to rising mortgage rates and high construction costs.
Key Points:
1. Builder sentiment dropped 6 points to 50 in August, the first decline in seven months.
2. Rising mortgage rates and high construction costs are impacting builder sentiment.
3. Buyer traffic and sales expectations have also declined, leading to more builders using sales incentives.
The downturn in Germany's residential construction sector worsened in July, with a record number of companies reporting dwindling orders, as higher interest rates and rising construction costs hamper new business.
High mortgage rates, reaching their highest level in 21 years, are driving up costs for home buyers and creating a sluggish housing market, with little relief expected in the near term.
New home sales in the US increased by 4.4% in July, outperforming expectations and highlighting the continued demand for new construction due to a shortage of existing affordable homes. Despite rising mortgage rates, buyers are turning to new homes, causing a decline in sales in the resale market. However, as mortgage rates continue to rise, builder sentiment may be negatively impacted and prices may need to be adjusted to attract buyers.
The U.S. housing market is currently experiencing a decrease in affordability due to high mortgage rates and stubbornly high prices, with affordability levels lower than during the 2006 housing bubble; however, experts do not predict a crash in the market due to a shortage of homes and a more stable lending environment.
Sales of existing homes have declined due to the rise in mortgage rates, but the demand for new homes is increasing as buyers are hesitant to sell their current homes with low-interest mortgages.
Homebuyers' purchasing power has been negatively impacted by rising mortgage rates, which averaged 7.2% in August, the highest level since 2001, resulting in a decline in existing home sales and a shift towards new-construction homes.
The average long-term mortgage rate in the US climbed above 7%, reaching its highest level since 2001, making it more difficult for homebuyers to afford rising home prices and exacerbating the low supply of properties on the market.
Home prices in the U.S. rose for the fifth consecutive month in June, despite high mortgage rates, with national prices increasing by 0.9% and only down 0.02% from their peak in June 2022, according to the S&P CoreLogic Case-Shiller index. However, there were significant regional differences, with cities on the West Coast experiencing some of the biggest declines. The housing market continues to face challenges due to low inventory and slow new construction.
The number of homes for sale in the US continued to decline in August, down by 9.2% compared to the previous year and 45% below pre-pandemic levels, leading to higher home prices and affordability concerns.
The share of million-dollar homes in the US is increasing, leaving homebuyers with limited affordable options and pushing essential workers out of communities they serve.
Demand for mortgages in the US has hit a 28-year low, with purchase applications falling to the lowest level since December 1996, despite a decrease in mortgage rates.
The gauge of US mortgage applications for home purchases fell to a 28-year low last week due to high mortgage rates, making homeownership less affordable and driving housing affordability to its worst point in decades.
Home builder confidence dropped in September as mortgage rates for a 30-year fixed-rate loan remained above 7%, resulting in a decline in buyer purchasing power, according to the National Association of Home Builders / Wells Fargo Housing Market Index.
US home building declined in August, with housing starts dropping to the lowest level since June 2020 due to elevated mortgage rates and limited inventory, despite an increase in building permits.
U.S. homebuilding hit a three-year low in August due to a decrease in demand caused by higher mortgage rates, while permits for future construction rose, suggesting support from limited housing inventory.
The U.S. housing market is facing a shortage of homes, which is driving up prices and making it difficult for buyers to find affordable options, and the problem may get worse as builders become less confident and hesitant to construct new homes due to high mortgage rates and construction costs.
The pace of new construction in the housing market slowed in August due to high mortgage rates and weakening demand, with housing starts falling to the lowest level since 2020, although building permits increased month over month.
US housing starts fell to their lowest level in three years, indicating a slowdown in homebuilding activity due to mortgage rates lingering above 7%.
The average long-term U.S. mortgage rate has increased, posing challenges for homebuyers in an already unaffordable housing market.
Sales of previously owned homes in the US fell for the third consecutive month in August, as higher mortgage rates, rising prices, and a lack of available properties have limited homebuyers' options.
New home sales dropped in August due to high mortgage rates, with sales of newly constructed homes decreasing by 8.7%.
Mortgage applications and housing demand have dropped as a result of increased mortgage rates, which are now at their highest levels in over 20 years, leading to limited inventory and fewer options for buyers.
The US housing market is facing tough conditions with low affordability, high mortgage rates, and a slowdown in sales that is expected to last for a long time, according to Redfin CEO Glenn Kelman.
Despite rising mortgage rates and a slowdown in new home sales, homebuilders in the Twin Cities are still experiencing high demand and are continuing to construct new homes at an increased rate.
As the US housing market starts to cool down, homebuyers are being presented with a good opportunity as more homes see price reductions, according to Zillow, with 9.2% of listings having a price cut in the week ending September 16, a higher rate than in 2019.
Rising mortgage rates are impacting home affordability, which has been declining since early 2021, causing some sellers to reduce their asking prices, but the lack of available properties remains a challenge for most buyers.
The housing market is slowing down due to soaring mortgage rates, which could lead to an economic downturn as home construction is curbed and growth prospects falter, according to billionaire investor Bill Gross.
Many young Americans are concerned about the difficulty of purchasing a home due to the high cost of real estate and stagnant salaries, particularly in cities experiencing intense gentrification, with Los Angeles, California seeing the largest increase in housing prices at 23.8% since September 2022, followed by San Diego, California and Richmond, California.
Higher mortgage rates are adding strain to prospective homebuyers as elevated home prices and a lack of inventory make it difficult to find affordable housing, with the 30-year fixed-rate mortgage now at its highest level since December 2000.
The U.S. housing shortage has worsened in suburbs and small towns, according to a report by nonprofit Up for Growth, which found a housing deficit of 3.9 million homes in 2021, representing a 3% increase from 2019, as the shortage spreads from coastal and urban areas to outlying regions.
American families are facing a variety of financial challenges, including inflation, high costs of living, and increasing mortgage rates, which are making it difficult for young families to buy homes; in addition, sudden job loss can lead to a financial doom spiral.
Confidence among builders in the U.S. housing market has fallen for the third consecutive month due to higher mortgage rates, leading to decreased demand for new homes. The National Association of Home Builders/Wells Fargo Housing Market Index dropped to 40, the lowest reading since January 2023, reflecting concerns about buyer traffic and housing affordability.
Homebuilder confidence in the US dropped to its lowest level in 10 months due to high mortgage rates, which have led to lower buyer traffic and decreased housing affordability.
New U.S. home construction rebounds in September, despite high mortgage rates, with housing starts rising 7%, but applications to build and building permits show a decline compared to last year.
US single-family homebuilding rebounded in September due to high demand and an acute housing shortage, but the surge in mortgage rates may slow momentum and delay the overall housing market recovery, as loan applications to purchase homes plummeted to levels last seen in 1995.
