U.S. builder confidence fell in May due to rapidly rising interest rates combined with the ongoing home price increases and construction costs, according to NAHB.
The NAHB Housing Market index declined to a reading of 69 this month from 77 in April.
This is the fifth consecutive month that builder sentiment has declined and the lowest reading since June 2020.
The HMI index gauging current sales conditions fell from 85 to 78, the index measuring traffic of perspective buyers dropped 9 points to to 52, and the index for sales expectations in the next 6 months dropped 10 points from 73 to 63 after rising in March.
The housing market is facing growing challenges,” said NAHB Chief Economist Robert Dietz. “Building material costs are up 19% from a year ago, in less than three months mortgage rates have surged to a 12-year high and based on current affordability conditions, less than 50% of new and existing home sales are affordable for a typical family. Entry-level and first-time home buyers are especially bearing the brunt of this rapid rise in mortgage rates.”
The Right Facts will continue to monitor the housing market.