Confidence in the housing market reaches its lowest point in a decade for home builders, according to a November report. Image from National Association of Home Builders
Nov. 16 (UPI) -- Confidence in the housing market continues to decline and if the latest report from the National Association of Home Builders is any indication, the situation will not turn around soon.
The monthly NAHB/Wells Fargo Housing Market Index declined for the 11th straight month, reaching its lowest level in more than a decade. The survey asks respondents to rate current market conditions for new single-family homes. By and large responses were more pessimistic across the board. The overall housing market index is 33 points for November. Anything below 50 points is considered negative.
Only one region, the West, reported a higher index score in November compared to October. The other three regions were markedly lower. Present single-family home sales scored six points lower to 39 points. Homebuilders' responses were four points lower, reaching 31 for their expectations of home sales in the next six months. The traffic of respective buyers was down five points to 20.
There are several factors at play leading to a less-than-favorable market. Home builders are still stretching to meet deadlines as they wait for the supply chain to catch back up. The slowdown caused a rapid increase in material costs, leading to construction costs skyrocketing. This is also slowing down the demand for construction, outside of necessary work. Four consecutive 0.75 point rate increases from the Federal Reserve only exacerbates the squeeze on the industry.
"Even as home prices moderate, building costs, labor and materials - particularly for concrete - have yet to follow," said NAHB Chief Economist Robert Dietz in a statement. "To ease the worsening housing affordability crisis, policymakers must seek solutions that create more affordable and attainable housing."
Regional confidence remains the lowest in the West, despite a three-point increase over October. The highest seasonally adjusted regional confidence is in the Midwest, which is at 36 points. The highest index for the three month moving average is 42 points in the South.
"With the housing sector in a recession, the Biden administration and new Congress must turn their focus to policies that lower the cost of building and allow the nation's home builders to expand housing production," said NAHB Chairman Jerry Konter.
