The homebuilder felt worried when the mortgage rates remained to be on 7% in September an average mortgage rate for a 30-year fixed-rate loan.
High Mortgage Rates
In the report of CNN, The Builder Confidence fell down when the newly built single-family homes in September fell five points to 45 in the market according to the National Association of Home Builders/Wells Fargo Housing Market Index on Monday. This also follows a six-point drop in August. And it is sad that the high mortgage rates drop lower.
The monthly index looks at the current sales, buyer traffic, and outlook sales of new-construction homes over the next six months. During the month of September reading is the first time in five months that the overall builder sentiment levels dropped lower the break-even measure of 50. This is very low for high mortgage rates.
The home builders felt the rising of their sentiments earlier this year as they saw the wave of demand caused by a lack of inventory in the existing market. Their confidence dropped for the first time of the year in August as high mortgage rates climbed.
Effects of High Mortgage Rates
The index measuring the present sales environment dropped six points to 51 in September, reflecting losses in all three of the new house market’s analyzed aspects. The indicator of anticipated sales for the following six months fell six points to 49. And the gauge that tracks the volume of potential purchasers fell five points to 30. This is due to the high mortgage rates.
In another report by KTVZ, Robert Dietz, Nahb’s Chief Economist said that the High Mortgage rates are taking a toll on the builder and consumer demand he also said that when the number of buyers who are electing is increasing to defer a home purchase until the long-term rates move lower. He also added that there must be a law that would help the builders to boost the supply of homes. With these, it will be the best solution for the country’s affordability crisis and stop the rise of housing prices. All of these are a result of high mortgage rates. In August, the inflation rate of housing grew by 7.3% compared to the total consumer inflation rate of 3.7%
More builders reduced prices to increase sales over the past month as high mortgage rates remained above 7%, according to NAHB.
Comparatively to 25% in August, 32% of builders reported declining home prices in September. Since last December, that is the highest percentage of builders who have reduced their prices. The typical price reduction is 6%.
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