Confidence among US homebuilders fell in June, driven by rising mortgage rates and material costs, as well as a sharp decline in sentiment in the South.
Process content
An index of general market conditions from the National Association of Home Builders and Wells Fargo fell 2 points this month to 35, according to data released Monday, lower than the 37 economists had expected in a Bloomberg survey. The South, the country’s largest housing region, saw the largest decline since November 2023.
A value below 50 means that more builders consider conditions bad than good. June’s level marks sentiment’s fourteenth consecutive month below 40, the longest streak since 2011-2012, NAHB said.
READ MORE:
Among the index’s components, a measure of current sales fell 2 points to 38, while measures of future sales and potential buyer traffic were unchanged, NAHB data show.
The home builders association partly attributes the decline in the general index to rising material prices, financing costs and regulations that hinder home construction.
“With the nation short of approximately 1.2 million homes, sentiment among builders will remain weak until barriers are removed and conditions for homebuilding improve,” NAHB Chairman Bill Owens, an Ohio builder, said in a news release.
The spring selling season — when home sales reach their annual peak — has been disappointing so far for publicly traded homebuilders, with soft demand leaving many with a backlog of undelivered orders well below last year’s levels, Bloomberg Intelligence analyst Drew Reading said in a note last week.
READ MORE:
This month, 35% of builders reported lower prices, compared to 32% in May. Meanwhile, 62% said they use sales incentives, up from 61% in May. This is the 15th month in a row that at least 60% have used it.
President Donald Trump has announced a series of initiatives to boost housing construction and improve affordability. A plan to restrict investor ownership of single-family homes is still pending in Congress.
Outside of the South, sentiment in the Northeast rose to its highest level since October, while sentiment in the West and Midwest was flat.
The federal government will provide an update on Tuesday with its housing construction report on the start of housing construction in May.