Builder sentiment in the market for single-family houses plunged in May as mortgage rates rose higher and building material posts persisted.
- Sentiment declined by 8 points to 69 in May. The readings above 50 are determined to be positive, but this is the fifth consecutive month that builder sentiment has dropped.
- Of the three components of the index, current sales conditions dropped 8 points to 78, and sales expectations in the next six months fell 10 points to 63. Buyer traffic dropped 9 points to 52.
- Buyers in April reported the average rate on the 30-year fixed mortgage increased from 4.88% to 5.41% and surged to reach 5.64% in the first week of May.
- Robert Dietz, the NAHB chief economist, stated that the housing market is struggling with growing challenges, further noting building material costs are up 19% from a year earlier.
Entry-level buyers have been hit significantly by the surging rates, but the decline in demand is being experienced across all levels.
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