Builders are increasingly nervous about the impact inflation and higher interest rates might have on prospective home buyers in coming months. The National Association of Home Builders (NAHB) said on Wednesday that its Housing Market Index (HMI) which it co-sponsors with Wells Fargo, reflected this as it declined for the sixth straight month in June. The HMI, which measures new home builder confidence in the market for newly built single-family homes, fell 2 points month-over-month to 67. It was the lowest reading for the index since June 2020, at the height of the pandemic lockdown. Robert Dietz, NAHB’s chief economist said the six months of negative changes are a clear sign that the housing market is slowing. “The entry-level market has been particularly affected by declines for housing affordability and builders are adopting a more cautious stance as demand softens with higher mortgage rates,” he said. The HMI is derived from a monthly survey that NAHB has been conducting for more than 35 years. Builders are asked to give their perceptions of current single-family home sales and their expectations for sales over the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

Published On: June 15, 2022 / Categories: Mortgage News /