Home Builders Have Trouble Selling Properties As Mortgage Rates Rise, Prices Stay Elevated

Sentiment among home builders is plummeting as Americans’ demand for properties begins to slow, according to a Wednesday report.

The National Association of Home Builders and Wells Fargo’s Housing Market Index fell by two points to 67 in June, reaching its lowest level since June 2020 in its sixth consecutive month of declines. A value over 50 indicates that more builders see conditions as good rather than bad.

The drop in optimism reflects high inflation and lackluster economic activity. Material costs for residential construction are 19% greater year-over-year, while mortgage rates are soaring to their highest levels since 2008 — excluding many potential home buyers from the market. As a result, total housing starts declined over 14% in May, with single-family home starts falling over 9%, according to data from the U.S. Census Bureau.