By Joshua Kirby
Confidence among U.S. home builders fell for the first time in a half year as would-be buyers balked at high mortgage rates. That is according to a report from the National Association of Home Builders released Wednesday. Here are the report's main takeaways:
--The NAHB housing-market index, produced alongside Wells Fargo, slumped to 45 in May after holding steady at 51 in April, marking the first decline since November. The index is a gauge of builder confidence in the market for single-family housing.
--Economists surveyed by The Wall Street Journal had expected the index to slip less sharply to 50, the index's breakeven point.
--Potential buyers are stepping back as mortgage rates climb, NAHB Chairman Carl Harris said. He also fingered new regulations forcing new homes to comply with energy-conservation rules. "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.
--A quarter of builders cut prices as an incentive this month, the survey showed, reversing previous months' decline in builders using such measures.
--All three of the major components used in the index deteriorated in May, with sales expectations falling most sharply. By region, only the Midwest improved. while the South, West and Northeast all showed worsening confidence.
--"A lack of progress on reducing inflation pushed long-term interest rates higher in the first quarter and this is acting as a drag on builder sentiment," NAHB chief economist Robert Dietz said.
Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby
(END) Dow Jones Newswires
05-15-24 1014ET
