Homebuilder sentiment swooned this month despite the passage of a major federal housing law designed to boost construction, as high costs and economic uncertainty continued to weigh on the industry.
Builder confidence in the market for newly built single-family homes dropped to 34 this month, down from a revised 36 in June, according to the National Association of Home Builders/Wells Fargo Housing Market Index released on Wednesday. Any reading below 50 reflects negative sentiment about the market.
The builder sentiment reading has now remained below 40 for 15 consecutive months, the longest such stretch since 2012.
Although homebuilders championed the landmark housing reform bill that passed Congress in June and became law last week, the package’s complex provisions likely won’t have an immediate impact on the market.
“The recently enacted 21st Century ROAD to Housing Act contains important provisions on land-use and zoning, regulatory reform and financing tools that address obstacles facing builders and buyers, but these reforms will take time to implement,” says NAHB Chairman Bill Owens.
Sales of newly built homes remained sluggish this spring, as an oil shock from the Iran war sent mortgage rates higher, denting affordability.
Contract signings for new homes fell to a seasonally adjusted annual rate of 580,000 in May, down 7.3% compared to April, according to U.S. Census Bureau data. The May figure was also down 6.8% from a year ago.
“Many potential buyers remain on the sidelines as they wait for lower mortgage rates, more certainty on inflation and a clearer economic outlook,” says Owens.
Developing story, more to follow.
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Keith Griffith is a senior news editor at Realtor.com covering housing policy, real estate news, and trends in the residential market. Previously, his work has appeared in Business Insider, The Street, Chicago Sun-Times, New York Post, and Daily Mail, among other publications. He has a master’s degree in economic and business journalism from Columbia University.
