In yet another sign of a slowing housing market, home builder confidence posted its seventh straight monthly decline in July. According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), confidence in new home construction fell 12 points to a 55 index rating this month.
This marks the lowest HMI reading since May 2020 and the largest single-month drop in the history of the HMI, except for the 42-point drop in April 2020.
All three HMI components posted declines in July: Current sales conditions dropped 12 points to 64; sales expectations in the next six months declined 11 points to 50; and traffic of prospective buyers fell 11 points to 37.
“Production bottlenecks, rising home building costs and high inflation are causing many builders to halt construction because the cost of land, construction and financing exceeds the market value of the home,” said NAHB Chairman Jerry Konter. “In another sign of a softening market, 13 percent of builders in the HMI survey reported reducing home prices in the past month to bolster sales and/or limit cancellations.”