Coupled with high mortgage rates and inflated construction costs, housing affordability is down, and builder sentiment reflected that across every month of 2022. In December, builder confidence dropped two points to 31 according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This reading is the lowest since mid-2012, except during the 2020 pandemic onset.

 

"Our latest survey shows 62% of builders are using incentives to bolster sales, including providing mortgage rate buy-downs, paying points for buyers, and offering price reductions. But with construction costs up more than 30% since inflation began to take off at the beginning of the year, there is little room for builders to cut prices," said NAHB Chairman, Jerry Konter.

From a three-month moving average for regional HMI scores standpoint, the South fell six points to 36, the West toppled to 26 with a three-point dip the Northeast dropped five points to 37, and the Midwest cooled four points to 34.