Homebuilder confidence stayed in negative territory after the index fell more than expected, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
- M-O-M: Homebuilder confidence fell to 46 in September, this is three points lower than August and is now the ninth straight month of declines.
- Y-O-Y: Homebuilder confidence is down 30 points from the same time last year and is now at the lowest level since 2014.
Swing and a Miss. Economists had projected a smaller drop to 47.
South Stays Positive. The South is barely holding on as it remained positive despite a three-point drop to 52. The South remains the only region still in positive territory in September.
- The Northeast and the Midwest were both unchanged for the month at 48 and 42, respectively. The West plummeted eight points to 34 in September.
Decline Across the Board. All three components of the index fell in September. Current sales conditions did remain positive after a one-point drop to 54, sales expectations in the next six months declined one point to 46, and traffic of prospective buyers fell one point to 31.
Analysis. Robert Dietz, NAHB Chief Economist who famously called the current housing market a recession last month, says the recession is showing no signs of abating. “Builder sentiment has declined every month in 2022, and the housing recession shows no signs of abating as builders continue to grapple with elevated construction costs and an aggressive monetary policy from the Federal Reserve that helped pushed mortgage rates above 6% last week, the highest level since 2008
- Dietz also mentioned the lengths builders are going to now to close deals. “In this soft market, more than half of the builders in our survey reported using incentives to bolster sales, including mortgage rate buydowns, free amenities, and price reductions.”
BOTTOM LINE: Unless construction costs fall or rates do homebuilders are not going to be very confident.