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.
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.
US mortgage applications for home purchases fell to their lowest level in 28 years, while refinancing also declined, as mortgage rates reached a 23-year high, according to data from the Mortgage Bankers Association.
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.
Mortgage payments in the US are at their highest since the mid-1980s, making housing deeply unaffordable, but surprisingly, rising mortgage rates have not led to a decline in house prices as supply of properties has fallen almost in lockstep with demand and locked-in homeowners have invested more in fixing up their current homes, leading to a robust housing market despite the economic challenges.
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.
Average 30-year mortgage rates are still elevated at 6.94% in August, but they are expected to come down by the end of the year; however, a significant drop that will boost homebuying demand is not likely until 2024 or 2025, but there are advantages to buying a home even when rates are high, such as less competition.
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.
Builder confidence in the US housing market unexpectedly dropped for the second consecutive month in September, as high mortgage rates dampened consumer demand for new homes.
US homebuilders are losing confidence in the housing market as mortgage rates remain high, causing a decline in buyer purchasing power and a negative outlook for the industry.
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.
Home prices continued to rise in August due to low inventory and high mortgage rates, causing a drop in home sales, according to a report from the National Association of Realtors.
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.
Sales of previously owned homes fell 0.7% in August from July, with high mortgage rates and tight supply impacting potential buyers.
Homebuyers are making fewer deals in August due to rough housing conditions, and the situation may worsen with potential mortgage rate increases to 8%.
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.
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.
30-year mortgage rates experienced their largest one-day drop since early March, falling almost three-tenths of a point to a record low, following a surge to a 23-year high the day before, prompting potential homebuyers to shop around for the best mortgage option.
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.
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.
Mortgage rates are expected to fall in the coming months, offering homebuyers more affordability and potentially boosting the housing market.
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.
