US homebuilder sentiment tumbles to near 14-1/2-year low in October
SPY•The NAHB/Wells Fargo Housing Market Index fell three points to 29 in October, its lowest level since June 2012, as mortgage rates and building costs rose. Builders cutting prices reached 43%, while the average reduction remained 6%.
1. Sentiment falls
The National Association of Home Builders/Wells Fargo Housing Market index dropped three points to 29 in October, its lowest level since June 2012. Economists polled had forecast a reading of 31.
2. Costs and demand
The article cites higher mortgage rates, energy-related building-material costs, tariffs and labor shortages as factors weighing on builders. Freddie Mac data showed the 30-year fixed mortgage rate averaged 7.40% last week, its highest level in nearly three years.
3. Price cuts increase
The share of builders cutting prices rose to 43%, the highest share during the 2020-2026 period; the average reduction held at 6% for a seventh month. Sales incentives were used by 65% of builders, while the index measures of current sales, future sales and prospective buyer traffic fell to 33, 32 and 18, respectively.
