Sentiment among U.S. homebuilders remained at one of its lowest levels in years this month, underscoring the deep freeze in the housing market despite a recent drop in mortgage rates.
An index of market conditions from the National Association of Home Builders and Wells Fargo was unchanged at 32 in September, similar to economists' estimates and remaining stuck in the low-30s range it's been lodged in since May. A value below 50 means more builders see conditions as poor than good.
Among the index's components, a gauge of present sales stayed at 34, while an index of prospective buyer traffic dipped slightly. Meantime, the measure of sales expectations in the next six months climbed to the highest level since March, reflecting the lowest mortgage rates in
"NAHB expects the Fed to cut the federal funds rate at their meeting this week, which will help lower interest rates for builder and developer loans," the group's chief economist, Robert Dietz, said in prepared remarks.
Those expectations have also bolstered a rally in shares of publicly-traded builders, Bloomberg Intelligence analyst Drew Reading said in a note last week. Nonetheless, sluggish demand and a rising supply of new homes on the market are still forcing builders to lean on sales incentives, Reading said.
This month, 39% of builders reported cutting prices, a new post-pandemic high, according to the NAHB. Meantime, a still-high 65% of builders reported using sales incentives this month.
Around the U.S., sentiment in the South, the US's biggest homebuilding region, remained at its lowest level since 2012, while confidence in the West and Midwest slipped slightly. However, sentiment in the Northeast, where the supply of homes has remained muted, rose by the most since the start of the year.
The Census Bureau will provide a report on U.S. housing starts on Wednesday, while reports on new- and existing-home sales for August are due next week.
