Builder Confidence Languishing, But Timing is Partly to Blame

The record will show that today's Housing Market Index (aka "builder confidence") from the National Association of Homebuilders (NAHB)/Wells Fargo fell to 39 from 41 last month. That's the 4th straight month of declines and the lowest level of the year. On the other hand, it's also part of a broad, sideways pattern that's been intact since late 2022. While we are well aware that the lockdowns caused the big drop in early-to-mid-2020, what's up with the equally big drop in 2022? This is almost exclusively a factor of interest rates. If we invert the red line (such that higher interest rates are at the bottom of the chart), we can see just how strong the correlation is. This isn't the construction industry's only problem, but it's definitely the biggest. Understanding this helps us understand why timing is partly to blame for this month's lower-than-expected reading. A vast majority of the survey responses arrived in the first week of the month, which means the recent drop in rates hadn't yet had time to stir up new buyer traffic. To be clear, even if the survey were taken today, it wouldn't make a huge difference in the big picture. First off, the data tends to lag mortgage rate movement by roughly 2 months. Even if it didn't, the present level of rate movement won't be enough to get confidence numbers out of the sideways bigger picture trend. For that, rates would need to drop into the 5% range and material/labor costs would have to remain in check.

August 15, 2024 Download our Mobile App: Download our Mobile App: Housing News Builder Confidence Languishing, But Timing is Partly to Blame The record will show that today's Housing Market Index (aka "builder confidence") from the National Association of Homebuilders (NAHB)/Wells Fargo fell to 39 from 41 last month. That's the 4th straight month of declines and the lowest level of ... (read more) MBS Commentary Jobless Claims May Have Hit Bonds Harder Than Retail Sales Jobless Claims May Have Hit Bonds Harder Than Retail Sales Hot take, and one that's subject to debate, depending on one's relationship with the bond market: Jobless Claims coming in at 227k vs 235k f'cast was... (read more) Mortgage Rate Watch Rates Jump Higher After Upbeat Economic Data Mortgage rates had moved a bit lower since their most recent high last Thursday. By yesterday afternoon, the average lender had moved down to 6.49 from just under 6.63 for a top tier conventional 30yr fixed purchase. After this morning's econom... (read more) Rob Chrisman Hedging, Pricing, Realtor Service, Home Eq Title, AI Products; STRATMOR on Referral Fallout; Sept. Events Looking at the attendees of various mortgage events around the nation over the last several months, I remember back to when a “new hip joint” meant some place that I wanted to go on a Friday night. Here at the MMLA Conference in Boyne Falls (if you e... (read more) Mortgage Rates 30 Yr. Fixed Rate 6.58% +0.09% Rate Change Points Mortgage News Daily 30 Yr. Fixed 6.58% +0.09 0.00 15 Yr. Fixed 6.15% +0.20 0.00 30 Yr. FHA 6.12% +0.07 0.00 30 Yr. Jumbo 6.74% +0.06 0.00 7/6 SOFR ARM 6.40% +0.15 0.00 30 Yr. VA 6.14% +0.07 0.00 Updates Daily - Last Update: 8/15 15 Yr. Fixed Rate 6.15% +0.20% Rate Change Points Freddie Mac 30 Yr. Fixed 6.49% +0.02 0.00 15 Yr. Fixed 5.66% +0.03 0.00 Updates Weekly - Last Update: 8/15 Rate Change Points Mortgage Bankers Assoc. 30 Yr. Fixed 6.55% -0.27 0.58 15 Yr. Fixed 6.03% -0.24 0.74 30 Yr. Jumbo 6.77% -0.30 0.50 Updates Weekly - Last Update: 8/7 MBS / Treasuries UMBS 30YR 5.5 100.41 -0.31 Price / Yield Change MBS UMBS 5.5 100.41 -0.31 UMBS 6.0 101.59 -0.25 GNMA 5.5 100.49 -0.13 GNMA 6.0 101.17 -0.14 Pricing as of: 8/15 5:31PM EST 10 Year US Treasury 3.9197 +0.0836 Price / Yield Change US Treasury 2 YR Treasury 4.097 +0.125 5 YR Treasury 3.795 +0.115 7 YR Treasury 3.829 +0.102 10 YR Treasury 3.920 +0.084 30 YR Treasury 4.179 +0.055 Pricing as of: 8/15 5:31PM EST Latest Video Rates need to move lower to see significant increase in refinancing, says F... Next jobs report will be a needle mover, says Charles Schwab's Liz Ann Sond... Consumer spending jumped in July as retail sales were up 1%, much better th... Business inventories meets expectations while NAHB sentiment misses to the ... Around the Web CNBC Here's the deflation breakdown for July 2024 in one chart Marketwatch One-third of home builders are slashing prices as confidence in the market falls to 8-month low NAR July 2024 Rental Report: Renting a starter home continues to be a more affordable option than buying one in all 50 metros Marketwatch Jobless claims drop to lowest level in five weeks Philly Fed Philly Fed Index Falls to -7.0 Calculated Risk Blog MBA: Mortgage Delinquencies Increased in Q2 2024 CNBC Consumer spending jumped in July as retail sales were up 1%, much better than expected Eye on Housing Homes Built in Age-Restricted Communities CNBC A U.S. construction boom is sending rents lower and creating perks for renters Marketwatch U.S. industrial output fell for first time in four months in July Marketwatch Musalem says time is nearing for Fed to cut interest rates Eye on Housing Builder Confidence Moves Lower as Market Waits for Rate Cuts CNBC Treasury yields rise as investors weigh inflation data

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