Builder sentiment levels remained unchanged in September, according to the latest the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) data report.
Builder confidence in the market for newly built single-family homes was 32 in September, unchanged from the August reading; any number over 50 indicates that more builders view conditions as good than poor.
The HMI index gauging future sales expectations in September rose inched up two points to 45, the highest reading since March of this year. The component measuring current sales conditions was unchanged at 34 while the gauge charting traffic of prospective buyers dipped by one point decline to 21.
Looking at the three-month moving averages for regional HMI scores, the Northeast was unchanged at 44, the Midwest gained one point to 42, the South held steady at 29 and the West increased one point to 26.
The latest HMI survey also revealed that 39% of builders reported cutting prices in September, up from 37% in August and the highest percentage in the post-Covid period. Meanwhile, the average price reduction was 5% in September – the same share that has been recorded every month since last November. The use of sales incentives was 65% in September, essentially unchanged from 66% in August.
“While builders continue to contend with rising construction costs, a recent drop in mortgage interest rates over the past month should help spur housing demand,” said NAHB Chairman Buddy Hughes, a home builder and developer from Lexington, North Carolina.
“NAHB expects the Fed to cut the federal funds rate at their meeting this week, which will help lower interest rates for builder and developer loans,” added NAHB Chief Economist Robert Dietz. “Moreover, the 30-year fixed rate mortgage average is down 23 basis points over the past four weeks to 6.35%, per Freddie Mac. This is the lowest level since mid-October of last year and a positive sign for future housing demand.”
