Builder confidence is sinking, according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).
The December Index is 56—a four-point decline from November and the lowest since May 2015. An above-50 reading indicates more builders have a positive outlook than a negative one.
“The fact that builder confidence dropped significantly in areas of the country with high home prices shows how the growing housing affordability crisis is hurting the market,” said Robert Dietz, chief economist of the NAHB, in a statement. “This housing slowdown is an early indicator of economic softening, and it is important that builders manage supply-side costs to keep home prices competitive for buyers at different price points.”
“We are hearing from builders that consumer demand exists, but that customers are hesitating to make a purchase because of rising home costs,” said Randy Noel, chairman of the NAHB. “However, recent declines in mortgage interest rates should help move the market forward in early 2019.”
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