Instability in the housing market lowers the confidence of homebuilders in the United States

the high mortgage loan ratesthe high construction costs derived from world inflation and the drop in consumer demand due to lack of affordability, have dragged down the confidence of construction companies in the States throughout 2022.

For the twelfth time in a row, the confidence of the housing developers single-family homes posted a monthly decline in December, falling two points to 31, according to the Housing Market Index (HMI) of the National Association of Home Builders (NAHB).

According to the study, this is the lowest reading since mid-2012, with the exception of the start of the pandemic in the spring of 2020.

Developers encourage the market

To keep the market afloat in the face of inflation and the rise in mortgage rates, construction companies have sought to maintain the housing supply affordable for buyers.

The Association’s survey found that 62% of builders use incentives to boost sales, including lower mortgage rates, paying user points and discounts.

Despite this, NAHB President Jerry Konter explained that construction costs have risen more than 30% since inflation spiked earlier in the year, so there is little room for real price reductions.

“Only 35% of the developers lowered the home prices in December. The average reduction was 8%, compared to the 5 or 6% that occurred at the beginning of 2022,” the specialist pointed out.

Finally, NAHB chief economist Robert Dietz mentioned that the market for housing construction in the United States has hit bottom, since, even in this economic climate, the country has a deficit of 1.5 million units and lower mortgage rates are anticipated with the easing monetary policy of the Federal Reserve in 2024.

“Las mortgage rates they have dropped from more than 7% in recent weeks to around 6.3 percent. In addition, for the first time since April, builders registered an increase in future sales expectations,” the expert concluded.