Confidence among American homebuilders fell for the third month in a row in July
An index of housing market conditions from the National Association of Home Builders and Wells Fargo fell 1 point to 42, the lowest level this year. The average Bloomberg estimate of economists surveyed was 43.
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An indication of sales expectations for the next six months was one of the few positives in an otherwise downbeat report Tuesday, with the forward-looking measure rising for the first time since March.
NAHB’s numbers on potential buyer traffic and current sales both fell to new lows for the year.
The average interest rate on a 30-year mortgage has fluctuated around 7% in recent months. Potential buyers, many of whom are waiting for cheaper financing costs, may soon experience some relief.
Mortgage rates appear to be mirroring U.S. Treasury yields, with 10-year Treasury yields near their lowest levels since March on prospects that the Federal Reserve will soon cut rates.
According to NAHB, a total of 31% of builders cut prices in July, down from the 29% who did so the month before. The average price reduction was 6% for the 13th month in a row, while the share of builders reporting taking advantage of sales incentives remained at 61%.
The share of available new homes sold in June – or the sector’s absorption rate – rose 1% from May, in a month when seasonal factors typically reduce sales by 6%. Certainly the heavy use of sales incentives has contributed, Reading said.
Builder sentiment in the Northeast saw the biggest drop among the four U.S. regions this month, with the measure falling 15 points to 47, the lowest since October. Sentiment declined in both the Midwest and the West, while remaining flat in the South.