Builder confidence steady as weak outlook continues

Builder confidence in the market for new, single-family homes held steady in September, according to September’s National Association of Home Builders/Wells Fargo Housing Market Index. .The index registered 32, unchanged from August, reflecting continued weakness in the housing market. Based on a monthly survey of homebuilders, the Housing Market Index is on a scale of 0 to 100. Any reading above 50 indicates more optimism than pessimism. The continued lack of confidence comes as mortgage rates remain much higher than their record lows in 2021. As of Sept. 22, the national average for a 30-year fixed-rate mortgage was around 6.37 percent, more than doubling the record low interest rate of 2.65 percent in January 2021. Some potential buyers are choosing to continue waiting until rates fall further. The current sales conditions index remained at 34 this month, while sales expectations for the next six months increased to 45. The index measuring the traffic of prospective buyers fell to 21. Nearly 39 percent of builders cut home prices in September — its highest share since the pandemic — with average reductions of 5 percent. Sales incentives also remained popular, used by 65 percent of builders.Homebuilding activity slowed in August as housing permits and starts fell, according to the U.S. Census Bureau and the Department of Housing and Urban Development. Privately owned housing permits dropped 3.7 percent from July to a seasonally adjusted annual rate of 1.31 million, down 11.1 percent from its year-ago mark. Single-family authorizations also slipped, falling 2.2 percent to 856,000. Permits for multifamily projects with five units or more held steady at 403,000.Housing starts weakened, falling 8.5 percent to an annual rate of 1.31 million — down 6 percent from August 2024. Single-family housing starts fell 7 percent to 890,000. In contrast, housing completions jumped 8.4 percent in August to a 1.61 million annual rate, though they remained 8.4 percent below last year’s level. Single-family completions rose 6.7 percent to 1.09 million, and multifamily completions were at 503,000.