Homebuilder sentiment continues downward spiral amid spike in mortgage rates
Redfin CEO Glenn Kelman analyzes the state of the housing market after mortgage rates surged past 7% on 'Cavuto: Coast to Coast.'
Confidence among builders in the U.S. housing market plunged for the third straight month in October as a spike in mortgage rates continued to weigh on consumer demand for new homes.
The National Association of Home Builders/Wells Fargo Housing Market Index, which measures the pulse of the single-family housing market, fell five points to 40, the lowest reading since January 2023. The decline followed a five-point drop in September.
Any reading below 50 is considered negative.
«Builders have reported lower levels of buyer traffic, as some buyers, particularly younger ones, are priced out of the market because of higher interest rates,» said NAHB Chair Alicia Huey, a custom home builder and developer from Birmingham, Ala. «Higher rates are also increasing the cost and availability of builder development and construction loans, which harms supply and contributes to lower housing affordability.»
HOME FORECLOSURES ARE ON THE UPSWING NATIONWIDE
Homes under construction in Sacramento, California, on July 3, 2023. (David Paul Morris/Bloomberg via / Getty Images)
Sentiment among builders had been steadily rising earlier this year as limited resale inventory pushed would-be buyers to seek out new construction instead. But when mortgage rates shot above 7% in September, it throttled demand among would-be homebuyers.
Rates are expected to remain elevated, as the Federal Reserve has hinted that it may hold interest rates at peak levels for longer than previously anticipated.
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