Home builder sentiment falls as mortgage rates remain high

Home builder sentiment fell for the first time in six months in May as mortgage rates averaged above 7 percent for the past four weeks, according to the National Association of Home Builders/Wells Fargo Housing Market Index..All three Housing Market Indexes fell this month. The index charting current sales conditions dropped six points to 51, while the component measuring sales expectations for the next six months fell nine points to 51. The gauge charting traffic of prospective buyers fell four points to 30. Builder confidence in the market for new single-family homes was 45 in May, down six points from April. .Twenty-five percent of builders reduced home prices to increase sales this month, ending four straight months of declines. The average price reduction in May held steady at 6 percent for the 11th straight month. .NAHB Chair Carl Harris said the housing market "has slowed down since mortgage rates increased and this has pushed many potential buyers back to the sidelines." He expressed concern over recent code rules requiring the U.S. Department of Housing and Urban Development and U.S. Department of Agriculture to only insure mortgages for new single-family homes if they are built to a 2021 international energy code. ."This will further increase the cost of construction in a market that sorely needs more inventory for first-time and first-generation buyers," Harris said. .According to the U.S. Census Bureau, there were 1.440 million private housing units authorized by building permits in April, down 3 percent from 1.485 million in March and a 2 percent drop from April 2023. There were 408,000 authorizations of units in buildings with five units or more. .The number of single-family housing starts fell 0.4 percent in April to 1.031 million from 1.035 million in March. There were 1.360 million private housing starts last month, up 5.7 percent from 1.287 million but still down 0.6 percent from 1.368 million in April 2023. The number of single-family housing starts fell 0.4 percent in April to 1.031 million. .Other April report findings included:.There were 1.623 million private housing completions last month, up 8.6 percent from 1.495 million in March. The number of single-family housing completions increased 15.4 percent to 1.092 million from 946,000 in March. There were 976,000 single-family authorizations in April, down 0.8 percent from 984,000 in March.