U.S. Homebuilder Investment Sentiment in August Drops to Lowest Level in Two and a Half Years

"1/3 of homes see price cuts, 2/3 offer buyer incentives"

"Persistently high prices and interest rates burden buyers"

Investment sentiment among U.S. homebuilders in August unexpectedly declined, dropping to the lowest level in two and a half years.

According to Reuters on the 18th (local time), the National Association of Home Builders (NAHB) announced that the NAHB/Wells Fargo Housing Market Index fell from 33 in July to 32 in August, marking the lowest level since December 2022. Experts surveyed by Reuters had predicted an improvement in the housing market sentiment index to 34.

More than one third of homebuilders reduced prices, and about two thirds offered incentives to attract buyers struggling with high mortgage rates and economic uncertainty.

NAHB's current sales conditions index declined, while the index tracking sales expectations for the next few months remained unchanged. Buyer traffic saw a modest increase to the highest level since May but was still considered low.

By region, builder sentiment in the Northeast dropped to the lowest level since January 2023, while the South and Midwest remained unchanged and the West showed a slight improvement.

NAHB Chairman Buddy Hughes stated, "The biggest challenge in the housing market remains affordability, and buyers are waiting for mortgage rates to fall." He added, "Builders are also facing persistent headwinds on the supply side, including ongoing dissatisfaction with regulatory policies related to land development and home construction."

Contributed by Jung-A Kim, Guest Reporter kja@hankyung.com