Homebuilder confidence in the South has slipped to the lowest level among the four U.S. regions, a position it hasn’t held since June 2012. Although confidence in the region rose slightly to 40 in September—up one point from August—it still represents the second-worst level this year, suggesting possible headwinds for one of the nation’s most resilient housing markets since 2020.
By The Numbers: National homebuilder confidence increased to 41 in September, exceeding economists’ forecasts of 40. The Midwest and West both saw notable gains, climbing to an index of 42, while the Northeast led the pack with a nine-point surge to 55.
- NOTE: Despite the South’s fall to last place, its three-month moving average still ranks it second behind the Northeast, hinting at potential longer-term strength.
Optimism: Builders’ sentiment is being lifted by a more optimistic outlook for the future. The index for single-family home sales over the next six months jumped four points to 53—the best reading since April. Current sales also rose to 45, and the traffic of prospective buyers edged up to 27.
What They’re Saying: Robert Dietz, NAHB Chief Economist, notes that it is not just about borrowing costs for the consumer but also the builder. “With inflation moderating, the Federal Reserve is expected to begin a cycle of monetary policy easing this week, which will produce downward pressure on mortgage interest rates and also lower the interest rates on land development and home construction business loans…Lowering the cost of construction is critical to confront persistent challenges for housing affordability.”
What to Watch: While the South’s moving average still shows resilience, a continued slowing in sentiment could signal deeper issues ahead for the region’s homebuilding industry.
