Contractors work on concrete slabs in the Cielo at Sand Creek by Century Communities housing development in Antioch, Calif., Thursday, March 31, 2022.
David Paul Morris | Bloomberg | Getty Images
Homebuilder sentiment in the single-family home market fell to a decade low in November as builders continue to grapple with rising labor and material costs and falling demand from home buyers.
A monthly sentiment index from the National Association of Home Builders fell 5 points from October to 33. It was the eleventh consecutive monthly decline and the lowest level since June 2012, except for a very brief dip at the start of Covid-19. pandemic which was followed by a strong rebound.
A year ago, builder sentiment was 83.
Across all three index components, current selling conditions fell 6 points to 39 and expectations to sell for the next six months fell 4 points to 31. Buyer traffic fell 5 points to 20 .
“Rising interest rates have significantly weakened demand for new homes as buyer traffic becomes increasingly scarce,” said NAHB President Jerry Konter, a builder and developer from Savannah, in Georgia.
Faced with mortgage rates that are more than double what they were at the start of the year, builders must offer better offers to potential buyers. NAHB said 59% of builders said they used incentives, a significant increase from September to November.
In November, 25% of builders said they paid points for buyers, up from 13% in September. Mortgage rate redemptions increased from 19% to 27% over the same period.
Additionally, 37% of builders reduced prices in November, compared to 26% in September, with an average price reduction of 6%. However, the price reductions are only about half of what builders offered in 2008 during the housing crash and the Great Recession.
“Even though house prices are moderating, construction costs, labor and materials — especially for concrete — have yet to follow suit,” said NAHB chief economist Robert Dietz. .
Regionally, on a three-month moving average, builder sentiment in the Northeast fell 6 points to 41. In the Midwest, it slipped 2 points to 38. In the South, it fell 7 points to 42 and down 5 points to 29 in the West.