Faltering builder confidence a “clear sign of a slowing housing market”

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All three HMI indices experienced declines in June. The component charting traffic of prospective buyers plunged five points to 48 – the first time this component has fallen below the breakeven level of 50 since June 2020. The HMI index measuring current sales conditions dipped one point to 77, and the gauge measuring sales expectations in the next six months dropped two points to 61.

“The housing market faces both demand-side and supply-side challenges,” NAHB chief economist Robert Dietz explained. “Residential construction material costs are up 19% year-over-year with cost increases for a variety of building inputs, except for lumber, which has experienced recent declines due to a housing slowdown. On the demand-side of the market, the increase for mortgage rates for the first half of 2022 has priced out a significant number of prospective home buyers, as reflected by the decline for the traffic measure of the HMI.”

“Government officials need to enact policies that will support the supply-side of the housing market as costs continue to climb,” Konter said.