WASHINGTON, Sept. 18 (Xinhua) -- U.S. homebuilder confidence dropped below the key break-even measure of 50 for the first time in five months amid high mortgage rates, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released Monday.
Builder confidence in the market for newly built single-family homes in September fell five points to 45, as persistently high mortgage rates above 7 percent continue to erode builder confidence, the association said in a statement. The decrease follows a 6-point drop in August.
The average rate on the 30-year fixed mortgage has been over 7 percent since June, due to the U.S. Federal Reserve's aggressive rate hikes since March last year. The target range for the federal funds rate is at 5.25 percent to 5.5 percent, the highest level in over two decades.
"High mortgage rates are clearly taking a toll on builder confidence and consumer demand, as a growing number of buyers are electing to defer a home purchase until long-term rates move lower," said NAHB Chief Economist Robert Dietz.
NAHB Chairman Alicia Huey, a custom home builder and developer from Birmingham, Alabama, noted that on the supply-side front, builders continue to grapple with shortages of construction workers, buildable lots and distribution transformers, which is "further adding to housing affordability woes."
Huey added that insurance cost and availability is also "a growing concern" for the housing sector.
As mortgage rates stayed above 7 percent over the last month, more builders are reducing home prices again to bolster sales, the statement said.
In September, 32 percent of builders reported cutting home prices, compared to 25 percent in August, making the largest share of builders cutting prices since December 2022, when 35 percent were doing so. The average price cut was 6 percent. ■