Home-Builder Sentiment Erodes as Mortgage Rates Weigh

By Ed Frankl

Confidence among U.S. home builders weakened again in June, hampered by high mortgage rates, according to a report from the National Association of Home Builders released Wednesday. Here are the report's main takeaways:

--The NAHB Housing Market Index, produced alongside Wells Fargo, declined to 43 in June from 45 in May, a second-straight fall and the lowest reading since December. The index is a gauge of builder confidence in the market for single-family housing.

--Economists surveyed by The Wall Street Journal had expected the index to remain at 45, below the index's 50 break-even point.

--"Persistently high mortgage rates are keeping many prospective buyers on the sidelines," NAHB Chairman Carl Harris said.

--Home builders are also dealing with higher rates for construction and development loans, chronic labor shortages and a lack of buildable lots, Harris said.

--The use of sales incentives by builders edged up to 61% in June from 59% in May, while 29% of builders cut home prices to bolster sales in June, NAHB said. However, the average price reduction held steady at 6% for the 12th straight month.

--All three of the components used in the overall index worsened in June, with each coming in below the 50 threshold. The index for sales expectations in the six months fell the sharpest, followed by current sales and traffic of prospective buyers.

--On a regional three-month basis, the index for the Northeast held steady, but it weakened in the Midwest and South.

Write to Ed Frankl at edward.frankl@wsj.com

(END) Dow Jones Newswires

June 19, 2024 10:14 ET (14:14 GMT)

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