Just how badly do they feel? Well, their sentiment has dropped to the lowest level since 2012 (with the exception of a brief period at the beginning of the COVID-19 pandemic). Builder confidence in the market for new single-family homes dropped to a reading of 38—half the level it was at just six months ago. Declining housing affordability has put pressure on the real estate market, where interested homebuyers are bowing out, choosing instead to sit on the sidelines and cross their fingers for prices to fall. The average rate of a 30-year fixed-rate mortgage is within spitting distance of 7%, according to Freddie Mac. That rate is likely only going to go higher since the Federal Reserve has remained committed to raising rates as long as inflation remains stubbornly high. This is weighing on the interest rates banks will attach to our loans, like mortgages. Right now, average rates are at their highest levels since April of 2002. Later this week we’ll also find out how many new homes are being built. The more that builders can increase housing supply, the more we might see home prices start to decline. But with builders so pessimistic about where the housing market is going, it’s unlikely they’ll ramp up production. This article originally appeared in ‘The Balance Today’ newsletter. You can get ‘The Balance Today’ delivered to your inbox daily, just sign up here.
