According to the National Association of Home Builders (NAHB), the Wells Fargo Housing Market fell by 6 points in August, to a score of 49, for the first time since May of 2020. This is below what they consider to be the “break even” point of 50. Indeed, sales of both existing homes and brand new homes have followed a downward trend for the better part of the last several months. Analysts advise this is the result of weaker affordability in the market coupled with consumer concerns over inflation, as well as the broader economy as a whole.
NAHB chief economist Robert Dietz appears to understand their plight. He comments, “Tighter monetary policy from the Federal Reserve and persistently elevated construction costs have brought on a housing recession.”
At the top of the year, the average 30-year mortgage rate was 3 percent, which has steadily increased to 6 percent in June. It has only fallen to around 5.5 percent since then.
Overall, consumer confidence in the housing market fell to its lowest metric since 2011. The measure, in July, indicates that only about 17 percent of those participating in a Fannie Mae survey believe this is a good time to buy a home, which is down form 20 percent, in June. Those who believe this is a good time to sell their home also fell by a similar metric, from 76 percent (in May) to 67 percent in July.
Fannie Mae senior vice president Doug Duncan also seems understanding. He notes that conditions are, surely, not favorable right now. And while these numbers are truly pessimistic, even fewer customers now believe home prices will improve; and those who think home prices will continue to drop actually increased from 27 percent to 30 percent.
Also Fannie Mae’s chief economist, Duncan concludes, “With home prices growth slowing, and projected to slow further, we believe consumer reaction to current housing conditions is likely to be increasingly mixed: Some homeowners may opt to list their homes sooner to take advantage of perceived high prices, while some potential homebuyers may choose to postpone their purchase decision believing that home prices may drop.”