WASHINGTON–U.S. homebuilder confidence fell in October to its lowest level in 14 years as high mortgage rates, rising costs and labor shortages weighed on the housing market, The Wall Street Journal reported.
The NAHB/Wells Fargo Housing Market Index, which measures builder confidence in the market for newly built single-family homes, declined three points to 29, its lowest reading since June 2012. Economists surveyed by the Journal had expected a reading of 31.
Mortgage rates that have climbed well above 7% in recent weeks are discouraging prospective buyers, along with higher gasoline prices and inflation, National Association of Home Builders Chairman Bill Owens said Monday, according to the Journal.
Builders also face higher costs for construction loans, materials and diesel fuel. Owens said immigration enforcement activity over the past month had worsened persistent labor shortages, delaying construction and discouraging some workers with legal status from reporting to work.
“Housing remains squeezed by supply-side constraints and significant affordability challenges,” NAHB Chief Economist Robert Dietz said, according to the Journal.
Buyer Traffic Weakens
The index measuring prospective buyer traffic fell five points to 18. Dietz said traffic reached its lowest level since April 2012, excluding the pandemic-related decline in April 2020.
The index measuring expectations for future sales also dropped five points, to 32.
More Builders Cut Prices
The survey found 43% of builders reduced prices in October, the highest share since 2020, the Journal reported. The average reduction remained at 6% for the seventh consecutive month.
Slightly fewer than two-thirds of builders offered sales incentives. That share has remained above 60% for 19 consecutive months.
