Homebuilder confidence in the South has declined for the third straight month, according to the latest NAHB/Wells Fargo Housing Market Index. The index fell to 44 in July, down from 46 in June, marking its lowest level since January.
A Down Month: The decline in confidence was not isolated to the South; all four regions saw drops in July. The Northeast experienced a six-point decrease, landing at 56, the only region to remain above the 50 threshold. The Midwest dropped four points to 43, and the West fell four points to 37, the lowest level among all regions.
National: Nationally, the housing market index decreased to 42 in July, down one point from June and reaching its lowest level since December 2023. The current sales conditions index nationally fell one point to 47, and the gauge measuring traffic of prospective buyers also dipped by one point to 27 in July.
Good News: There was a positive note in the report: the component measuring sales expectations for the next six months increased by one point to 48, the first rise since March.
What They’re Saying: Robert Dietz, NAHB Chief Economist, remained optimistic despite the overall decline in confidence. “Though inflation is still above the Federal Reserve’s target of 2%, it appears to be back on a cooling trend. NAHB is forecasting Fed rate reductions to begin at the end of this year, and this action will lower interest rates for home buyers, builders, and developers,”
- He also noted that while home inventory is increasing, the total market inventory remains lean at a 4.4 months’ supply, indicating a continued need for more home construction.
The drop in confidence highlights ongoing challenges in the housing market, including high interest rates and economic uncertainty. However, the expectation of potential rate cuts and a continued demand for new homes provide some hope for the sector moving forward.
