US home builder confidence tumbles in July - NAHB
US home builder sentiment tumbled in July as high inflation and increased interest rates stalled the housing market, slowing sales and buyer traffic, according to the National Association of Home Builders.
The NAHB index of homebuilder activity and sentiment fell to 55 from 67 in June, coming in well below consensus expectations of 65.
"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," said NAHB chairman Jerry Konter.
"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."
NAHB chief economist Robert Dietz said affordability is the greatest challenge facing the housing market.
"Significant segments of the home buying population are priced out of the market. Policymakers must address supply-side issues to help builders produce more affordable housing," he said.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "This was an accident waiting to happen. Homebuilders have been in denial about the extent of the drop in demand, despite mortgage applications falling by more than a quarter over the first half of the year, with no end in sight to the decline.
"Now, they are acknowledging reality. Buyers are disappearing in the face of the surge in rates, and inventory is too high. Supply of existing homes is now shooting higher, giving buyers a choice for the first time since the initial pandemic plunge in sales."