Builder confidence deteriorates due to halted construction projects

In a sign of a weakening housing market, sentiment among US home builders deteriorated in July as stalled construction soured moods.

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released Monday came in at 55 in July, down 12 points from June. This marks the lowest HMI reading in two years and the largest single-month drop in the history of the HMI, except for the 42-point drop in April 2020. The July reading also represents the seventh straight monthly decline in builder confidence in the market for newly-built single-family homes.

“Production bottlenecks, rising home-building costs, and high inflation are causing many builders to halt construction because the cost of land, construction and financing exceeds the market value of the home,” said NAHB chairman Jerry Konter. “In another sign of a softening market, 13% of builders in the HMI survey reported reducing home prices in the past month to bolster sales and/or limit cancellations.”