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Builder sentiment in the market for single-family homes rose 1 point in July, to 56, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
It marks the seventh consecutive month of gains and the highest level since June 2022. A reading above 50 is considered positive sentiment.
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Builders say reduced supply in the resale market is driving demand for new construction, but high mortgage rates and supply-side challenges continue to put pressure on the market.
“Although builders remain cautiously optimistic about market conditions, the quarter-point rise in mortgage rates over the past month is a stark reminder of the stop and start process that the market will see as the Federal Reserve nears the end of its ongoing tightening cycle,” said Robert. Dietz, chief economist at NAHB.
Average price over popularity Fixed mortgage for 30 years It topped 7% briefly in May and then again at the end of June. It has only decreased slightly in the past week. These higher rates are straining market affordability, as existing home prices are once again rising.
Among the three components of the NAHB index, current sales conditions in July rose 1 point, to 62; Buyers’ movement increased 3 points to 40, the highest reading since June last year; The forecast for sales in the next six months fell by 2 points to 60. The drop in forecasts is attributed to the jump in interest rates and the resulting impact on affordability.
Even though mortgage rates are higher, builders use fewer incentives. Only 22% of construction companies reported price cuts in July. This is down from 25% in June and 27% in May.
Newly built home sales in May, the latest reading available, jumped 13% compared to April and were 20% higher than in May 2022, according to the US Census Bureau. The median price is down over 7% from May of last year, but that average may be skewed by home sale mix, which is currently leaning toward the lower end.
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