Key Points
- 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.