Home builder confidence plunged every single month this year as higher interest rates weakened demand in the formerly booming housing market, the National Association of Home Builders reported Monday, but with the Federal Reserve finally starting to slow down on its aggressive interest rate hikes, economists think the end of the collapse could be in sight—even if a full-blown recovery isn't....
Builder confidence in the market for new homes posted its 12th-straight monthly decline in December, dropping 2 points to 31—down from 84 points one year ago and hitting the lowest lowest level since 2012, excluding a historic plunge at the start of the pandemic, according to the NAHB/Wells Fargo Housing Market IndexThe association called the ongoing collapse a byproduct of high inflation and high mortgage rates, which have made homes less affordable and deterred demand from prospective home...
In a statement, NAHB chief economist Robert Dietz said he expects weaker housing conditions to persist next year before a recovery in 2024, as the Fed reverses its aggressive monetary policy of this year; however, he also outlined a"silver lining" in the report. Dietz notes this month's drop in the index marks the smallest decline in the past six months—a sign builder sentiment could soon start to fall—and for the first time since April, builders now expect future sales will actually increase, thanks in part to mortgage rates falling to 6.3% from a peak above 7% in recent weeks.
In emailed comments, Pantheon Macro senior economist Kieran Clancy agreed that the rise in expected sales signals home sales may soon stop falling, as quickly as the first quarter, but he cautioned a"meaningful recovery is still a long way off," noting home prices have"much further to fall" as higher interest rates linger in the coming quarters.
When the consumer is dealing with $5 dozen of eggs and multiple interest rate hikes, material shortage, labor shortage and the promise of higher energy bills. Doesn't make you want to buy anything let alone a new house.
Why that ?
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