U.S. home builder sentiment plummeted in July to its lowest level since the early months of the coronavirus pandemic, as high inflation and the steepest borrowing costs in more than a decade brought customer traffic to a near standstill.
At the same time, a gauge of activity in the services sector activity in the U.S. Northeast turned negative this month for the first time in a year, and firms there do not see an improvement over the next six months.
The National Association of Home Builders/Wells Fargo Housing Market Index fell for a seventh straight month to 55, the lowest level since May 2020, from 67 in June, NAHB said in a statement on Monday. Readings above 50 mean more builders view market conditions as favorable than poor.
July's reading was below all 31 estimates in a Reuters poll of economists, which had a median expectation for a decline to 65. Moreover, the 12-point drop was the second-largest in the history of the series dating to 1985, exceeded only by the 42-point plunge in April 2020 when most of the country was under a COVID-19 lockdown.
"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," NAHB Chairman Jerry Konter, a home builder and developer from Savannah, Georgia, said in a statement. "In another sign of a softening market, 13% of builders in the HMI survey reported reducing home prices in the past month to bolster sales and/or limit cancellations."
The component for current sales of single-family homes fell to 64 from 76. The gauge of single-family sales expectations for the next six months fell to 50 from 61, while the prospective buyer traffic index tumbled to 37 from 48.
Commentaires