In May, builder sentiment in the market for single-family homes fell an outsized 8 points to 69, according to the National Association of Home Builders and the Wells Fargo Housing Market Index. Although readings above 50 are considered positive, this month’s reading marks the fifth straight month that builder sentiment has declined and the lowest reading since June 2020.
In an interview with CNBC, NAHB Chairman Jerry Konter, builder and developer in Georgia, said “housing leads the business cycle, and housing is slowing.”
The housing market is facing a multitude of challenges — in less than three months, mortgage rates have surged to a 12-year high; building material costs are up 19% from a year ago; and based on current affordability conditions, less than 50% of new and existing home sales are affordable for a typical United States family.
First-time home buyers are being hit the hardest by rising rates, but the drop in housing demand is present across all levels. Some surveys are also showing an increase in cancellation rates for new construction.
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