Confidence among U.S. single-family homebuilders dropped to a two-year low in June as high inflation and rising mortgage rates reduced affordability for entry-level and first-time buyers, a survey showed on Wednesday.
The National Association of Home Builders/Wells Fargo Housing Market index fell two points to 67 this month, the lowest reading since June 2020. It was the sixth straight monthly decline in the index. A reading above 50 indicates that more builders view conditions as good rather than poor.
“The entry-level market has been particularly affected by declines for housing affordability and builders are adopting a more cautious stance as demand softens with higher mortgage rates,” said NAHB Chairman Jerry Konter. “Government officials need to enact policies that will support the supply-side of the housing market as costs continue to climb.”
The survey’s measure of current sales conditions slipped one point to 77. Its gauge of sales expectations over the next six months dropped two points to 61.
The component measuring traffic of prospective buyers fell five points to 48, marking the first time this gauge has fallen below the breakeven level of 50 since June 2020.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)