Homebuilder confidence was expected to fall slightly in July but instead plummeted double-digits, according to the National Association of Home Builders/Wells Fargo Housing Market Index…(NAHB)
- M-O-M: Homebuilder confidence fell 12 points to an index of 55, this is the largest single-month drop in the history of the HMI, except for the 42-point drop in April 2020.
- Y-O-Y: Homebuilder confidence is down 25 points when compared to the index one year ago.
SWING & A MISS: Economists had projected the index to fall one point to 67.
All three indices also saw substantial drops month-over-month. Current sales conditions fell twelve points to 64, sales expectations in the next six months were down eleven points to 50, and traffic of prospective buyers also fell eleven points and is now down to just 37.
- NOTE: A number over 50 indicates that more builders view conditions as good than poor.
Regionally, the South held on to the top spot despite an 8-point drop to 70. The Northeast moved up to number two even with a 6-point decline to 65, the West reported the biggest monthly drop with a 12-point drop to 62, and the Midwest was a distant 4th after a 4-point fall to 52.
Jerry Konter, NAHB Chairman and home builder and developer from Georgia, noted that rising commodity prices make building impossible if home prices are falling. “Production bottlenecks, rising home building costs and high inflation are causing many builders to halt construction because the cost of land, construction and financing exceeds the market value of the home,”
- NOTE: Konter noted that falling prices are already happening for builders “In another sign of a softening market, 13% of builders in the HMI survey reported reducing home prices in the past month to bolster sales and/or limit cancellations.”
