Homebuilder confidence was down for the 10th straight month, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index October report.
- M-O-M: Homebuilder confidence plummeted eight points to 38 in October, this is much worse than the two-point drop projected by economists.
- Y-O-Y: Homebuilder confidence is now down 42 points from one year ago.
Across The Board. All three HMI components fell in October. Current sales conditions keeps the top spot at 45 despite a nine-point drop from September. Sales expectations in the next six months declined eleven points to 35 and traffic of prospective buyers fell six points to 25.
Even The South. Not even the South could stay in positive territory with October’s drop. The South fell seven points to 49, the Northeast is now a close second at 48(-3) followed by the Midwest at 41(-3) and the West fell seven points to 34.
Analysis. Robert Dietz, NAHB Chief Economist, said that builder confidence will decline for the first time in 11-years. “This will be the first year since 2011 to see a decline for single-family starts…And given expectations for ongoing elevated interest rates due to actions by the Federal Reserve, 2023 is forecasted to see additional single-family building declines as the housing contraction continues. While some analysts have suggested that the housing market is now more ‘balanced,’ the truth is that the homeownership rate will decline in the quarters ahead as higher interest rates and ongoing elevated construction costs continue to price out a large number of prospective buyers.”
BOTTOM LINE: With rates close to 7.0% builders clearly aren’t feeling very confident about buyers.