Each new home data point is worse than the last, and they encourage a leading industry analyst to say that the market is in a correction.
Single-family homes began to fall more than 13 percent year-on-year, according to US census. Building permits, an indicator of future construction, were down almost 2 percent .
This followed a sharp decline in homebuilder sentiment to the lowest level for more than three years, according to the National Association of Home Builders.
"I definitely think we are in correction," said John Burns, Managing Director of John Burns Real Estate Consulting. "According to our survey last year, sales were 1[ads1]9 percent lower than the year before. … I would call it a correction."
Burns points to higher mortgage rates, along with the rise in house prices in recent years, as owed. Mortgages are a full percentage point higher now than they were a year ago. Half of the Americans can only afford a $ 230,000 mortgage, according to Burns, and builders in good places just can not build on that price point. Eleven of the 19 best builders have an average selling price of over $ 400,000.  "The rise in mortgage rates has really been a double whammy for them," Burns said. "A lot of focus has been on the first time buyer who now can afford 7 percent less than they could at the beginning of the year just because of housing and housing prices even worse than that."
Builders can not beat the lower price points because of higher costs for land, work and materials. Although they may build cheaper homes further outside major metropolitan areas, making it risky, given that demand is so weak.
"As long as builders are still concerned about the demand for buyers, it will be likely that single families will start as builders adapt production accordingly," said economist Danielle Hale at Realtor.com. "Rising housing prices and mortgage rates have created high barriers to homebuyers, while cost increases have made it difficult for builders to deliver homes at the most sought after price points."