Builder confidence in the market for newly built single-family homes during June fell two points to 35, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). Any HMI reading over 50 indicates that more builders view conditions as good than poor.
June marked the 14th straight month that sentiment has remained below 40, a streak not seen since 2011-2012 during the foreclosure crisis.
“With the nation short about 1.2 million homes, builder sentiment will remain soft until barriers are eased and conditions improve for home building,” said NAHB Chairman Bill Owens, a home builder and remodeler from Worthington, Ohio. “Congress can help by passing the major housing package now before the Senate, along with the CONSTRUCTS Act to address the construction labor shortage and the Energy Choice Act to prevent state and local bans on natural gas in new homes.”
The HMI index gauging current sales conditions fell two points to 38 in June, the index measuring future sales held steady at 45 and the index charting traffic of prospective buyers remained unchanged at 25.
Looking at the three-month moving averages for regional HMI scores, the Northeast rose two points to 44, the Midwest held constant at 43, the South fell two points to 33 and the West dropped one point to 27.
The latest HMI survey also revealed that 35% of builders cut prices in June, up from 32% in May. The average price reduction was 6% in June, the same rate as the previous month. The use of sales incentives was 62% in June, up slightly from 61% in May, and marking the 15th consecutive month this share has reached 60% or higher.
“Costly and inefficient regulatory policy is clearly impeding the ability of builders to increase the housing supply,” said NAHB Chief Economist Robert Dietz. “According to a new NAHB study, government regulation, taxes, fees and other costs add more than 26% to the price of an average single-family home. Easing permitting bottlenecks, density limits and inefficient zoning rules would help reduce costs and support the housing growth the nation needs.”
I thought Bill Pulte was supposed to help out the Builders, what happened to that ???
When houses went from shelter to investments, builders stopped building affordable homes. Many are never lived in and now they are for sale & who is supposed to afford them? What high end jobs are there to help pay for all the housing??
It’s not helpful that the term Affordability seems to be a political assessment instead of informative coverage of what contributes to housing shortages and what can be changed. Having lived in various states, I am somewhat dismayed that regional differences are not examined in any way to better assess building solutions.
Yes, the profit potential on those large new homes in perfect communities is a factor. So I ask, what new home could an average income couple want or afford? We are lucky in NYS that the governor pulled back on the requirement that all new homes had to be fully electrical. It was the gas stove or fireplace that keep people alive in the blizzard of December 2022.
Everything is local and federal regulation must take that into account. One fixed cost item that adds a lot to construction is meterage…getting a water meter, electric meter, gas meter, all of these are high expense items where I live, in the tens of thousands. For a large luxury home such costs are a drop in the bucket, but for lower level entry level homes they are a significant cost and drop the profit margin to where the builders don’t want to build them. To encourage building these homes maybe the local municipal governments can carry the costs in exchange for long term transferable liens that only need to be paid off if the current owner makes significant improvements to the property like changing it from a 2 bedroom to a 4 bedroom, or adding an additional 1000 square feet or something. Liens expire after 50 years and are also tied to the CPI so the payoff will be in equivalent dollars when/if the the lien is paid off.