Homebuilder confidence drops to lowest level since December 2023

Homebuilder confidence dropped to its lowest level since December 2023 due to high home prices and elevated interest rates. Yahoo Finance Senior Reporter Dani Romero joins Wealth! to break down the latest data from the National Association of Home Builders/Wells Fargo Housing Market Index and what it means for the overall state of the market.

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This post was written by Melanie Riehl

Video Transcript

We want to turn now to the housing market.

Home builder confidence dropping to its lowest level since last December thanks to high home prices and elevated interest rates to discuss.

We have Yahoo finance is very own.

Danny Romero.

Danny Brad, home builders aren't feeling too confident about the housing market.

The National Association of Home Builders housing market index fell to 39 in August and that's lower than what economists were expecting of a reading of 43 points.

Remember any number on 50 indicates that more builders view conditions as poor rather than good.

So for some context, the National Association of Home Builders reported that about 75% of their survey responses in August or when mortgage rates were hovering well above 6.7%.

And as a result, builders had to cut home prices to boost those sales in August with 33% of builders reporting slashing home prices.

That's the highest share so far this year.

Meanwhile, the use of sales incentives increased to 64% in August from a reading of 61% in July.

So marking the highest level since April of 2019.

Now it is important to note that new home sales have held up better than existing home sales this year despite sales dropping over the past few months.

Now, many home builders have been offering incentives to sweeten the deal for buyers.

But looking ahead the measure that tracks sales expectations for the next six months.

Climbed up, climbed one point which really reflects the expectations that mortgage rates are set to fall.

And that's according to the National Association of Home Builders Projections.

Brad.

Thanks so much.