A key measure of homebuilder confidence unexpectedly improved in August but remains at a subdued level as elevated interest rates and construction costs weigh on the market.
The National Association of Home Builders said its Housing Market Index, produced with Wells Fargo, ticked up one point to 35
The overall Housing Market Index from the National Association of Home Builders and Wells Fargo edged up 1 point to 35 this month. A reading below 50 means that more builders perceive current sales conditions and expected conditions as bad rather than good. The index has remained below 40 for 16 weeks.
Still, the results were better than expected. Economists had forecast the index would decline to 33.
“Our latest builder survey continues to show signs of weakness in the home building market,” said NAHB Chief Economist Robert Dietz. “August marked the 16th straight month that at least 30% of builders reported cutting prices to support demand, as well as the 16th consecutive month with the HMI below 40.”
More than one out of three builders cut prices in August, although the precise estimate of 35 percent was down from 37 percent in July, and unchanged from June. The average price reduction was 6 percent, matching the price reduction in the prior month.
“While builder sentiment edged higher in August, builders continue to contend with high construction costs and broader economic uncertainty,” said NAHB Chairman Bill Owens, a home builder and remodeler from Worthington, Ohio. “Rising gas and diesel prices are pushing up material costs, and spec home building remains weak as many prospective buyers stay on the sidelines.”
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