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Homebuilder sentiment falls to the lowest point for more than 3 years

Homebuilder sentiment dropped in December to its lowest point in over three years, while potential buyers hesitate to buy new homes even as housing rates have retreated over the last month.

According to the National Association of Home Builders / Wells Fargo Housing Market Index, homebuilder sentiment reduced four points in December to 56. This is the lowest reading since May 2015 and well below December 2017's level of 74. This comes after an eight-point drop in November. However, over 50 is considered a positive feeling.

"We hear from builders whose consumer demand exists but that customers hesitate to buy on due to rising housing costs, "said NAHB's chairman Randy Noel, a homebuilder from LaPlace, Louisiana." However, recent decline in mortgage rates should help move the market forward in the early 201[ads1]9. "

Hypothecies jumped in early 2017 and then again in September to the highest level of eight years. They fell back in November but were still almost one full per cent higher than a year ago. Newly-built homes come at a premium price for existing homes, thus becoming more sensitive to any changes in affordability. Mortgage rates are expected to be higher in 2019.

Homebuilders have been focused on the resettlement and luxury sector Although demand for high-level housing is high, builders say that given the high cost of land, labor and materials, they fail to build as many home homes as they may want. Housing prices for new and existing homes have increased in recent years, since demand dramatically exceeded the offer.

Of the index's three components, the current terms of sale fell six points to 61, and expected sales in the next six months dropped four points to 61, buying traffic dropped two points to 43.

Regionally, on a three-month moving average, the builder's sentiment in the Midwest fell two points to 55; West and South both dropped three points to 68 and 65 respectively; and the Northeast threw eight points to 50.

"The fact that the builders' trust fell significantly in parts of the country with high housing prices shows how the growing housing credit crisis is damaging the market," said Robert Dietz, CFO of NAHB. "This decline in housing is an early indicator of economic softening, and it is important that builders handle costs on the supply side to keep house prices competitive for buyers at different price points."

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