Home Builder Sentiment Declines for Tenth Month in a Row

home builder sentiment declines tenth month row plymouth title guaranty corporation featured

As mortgage rates to 20-year highs, home builder sentiment declined for the tenth month in a row. Similarly existing home sales fell for the eighth straight month.

Further complicating the real estate market, housing inventory presents an ongoing barrier to prospective home sales activity. Despite the longstanding challenge, new construction remains slow.

NAHB Survey Indicates Continual Decline in Home Builder Sentiment

Last month, the National Association of Home Builders came out with their latest survey results. Overall, home builder sentiment dropped for the tenth month in a row. Currently, home builder sentiment sits at a 38.

As a result, sentiment declined to the lowest level since 2012. Of course, this excludes a brief period at the beginning of the COVID-19 pandemic. Overall, levels below 50 reflect a negative sentiment.

Negative Home Builder Sentiment Related to Housing Inventory Struggles

Looking at the real estate market as a whole, analysts correlate the negative home builder sentiment with the persistent housing inventory challenge. Dropping slightly lower than this time last year, housing inventory currently hovers at a 3.2-month supply. Typically, real estate analysts point to a 6.0-supply for market equilibrium.

Holistically, housing inventory shortages persisted for nearly 20 years in the United States. Despite this being a continual problem for the real estate industry, construction of new single-family homes remains painfully slow. As a matter of fact, housing starts declined 8% year-over-year in September 2022. More so, single-family starts plummeted more than twice as much, dropping 19% annually.

A Silver Lining for the November 2022 Real Estate Market Data

While October 2022 continued the trend of rising mortgage rates, the end of the month saw a noticeable decline. Although this goes far from solving the trend of negative home builder sentiment, it does indicate a potential market shift from home sellers to prospective buyers.

However, the main crisis at hand still comes down to the housing inventory challenges. While lower inflationary pressures may reduce the price for materials, home builders still face shortages. Until the shortages for land, materials, and skilled labor are resolved, a faster pace of construction will remain out of reach for the United States real estate market.

For insight on the latest real estate market data, contact the title and escrow specialists at Plymouth Title Guaranty Corporation.

Information accredited to MBSQuoteline.

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