Builder Confidence Slips, Breaking Seven-Month Upward Streak

Builder confidence has dipped, breaking a seven-month streak of increases, as high rates and shelter inflation put a dent in new home demand.

The National Association of Home Builders and Wells Fargo Housing Market Index, which tracks confidence in the new single-family home market, decreased by 6 points to a reading of 50.

NAHB said that construction costs, lack of buildable lots, and ongoing shortages forced the reading down this month.

“But while this latest confidence reading is a reminder that housing affordability is an ongoing challenge, demand for new construction continues to be supported by a lack of resale inventory, as many homeowners elect to stay put because they are locked in at a low mortgage rate,” NAHB Chairman Alicia Huey said.

NAHB noted that the pool of buyers is shrinking as affordability keeps many potential buyers on the sideline.

Shelter inflation is up 7.7% YOY, and the high-rate environment has pushed monthly payments out of reach for many Americans.

Many homebuilders cut prices and offered incentives to attract customers in August, including rate buydowns and paying closing costs. It is costly for homebuilders to keep unsold inventory on their books, so losing a little money on a sale is still preferable.

“For example, if the economy is struggling, lower interest rates and cash at close may help buyers qualify that would otherwise be unable to afford a particular community,” Bob Seeman, vice president of sales, new homes at, explained.

Builders maintain that more homes are necessary to end the U.S.’s affordability crisis. Even as demand is dwindling, a surge of inventory will eventually bring prices back down to Earth.

“The best way to bring housing inflation down and ease the housing affordability crisis is to enact policies at all levels of government that will allow builders to construct more homes to address a nationwide shortfall of approximately 1.5 million housing units,” said NAHB Chief Economist Robert Dietz. 

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