Home builder confidence remains stunted by high interest rates

Home builder confidence increased this month but continued to indicate weak housing conditions according to the National Association of Home Builders/Wells Fargo Housing Market Index..The index tracking builder confidence in new single-family homes increased one point to 33, its 15th straight month of being below 50, indicating ongoing concern amid worsening affordability fueled by high interest rates. The index tracking sales expectations for the next six months increased three points to 43, while the measurement of current sales conditions increased one point to 36. The index tracking buyer traffic fell one point to 22, its lowest reading since late 2022. According to the report, the recent passage of the tax and spending package One Big Beautiful Bill Act provided a slight rise to future sales expectations, but high interest rates and economic uncertainty continued to limit housing market activity. Federal Reserve Chair Jerome Powell has faced pressure from the Trump administration to lower interest rates, which are set at 4.3 percent. Powell says the higher rate is needed until the impacts of Trump’s sweeping tariffs are fully realized. Trump disagrees, criticizing Powell in personal terms but saying it is “highly unlikely” he will fire him. Thirty eight percent of builders reduced prices this month, which is the highest since tracking started three years ago. Sixty two percent used sales incentives, which was unchanged from June. “Single-family housing starts will post a decline in 2025 due to ongoing housing affordability challenges,” predicted NAHB Chief Economist Robert Dietz. “Single-family permits are down 6 percent on a year-to-date basis.” Single-family authorizations fell 3.7 percent last month to 866,000 from 899,000 in May, according to the Census Bureau. Privately-owned housing units greenlighted by building permits increased 0.2 percent in June to 1.397 million from 1.394 million, but was 4.4 percent under the year-ago mark of 1.46 million. Other June findings included:Privately-owned housing starts increased 4.6 percent to 1.321 million, but was still a half-percent under the June 2024 mark of 1.327 million. Privately-owned housing completions fell 14.7 percent to 1.31 million from 1.54 million in May, dropping nearly 25 percent from 1.73 million in June 2024. Single-family housing starts fell 4.6 percent to 883,000 from 926,000 in May. Single-family housing completions dropped 12.5 percent last month to 908,000.