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U.S. is in housing recession, homebuilders say

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Workers excavate plywood at a single-family home under construction in Lehi, Utah, Friday, January 7, 2022.

George Frey | Bloomberg | Bloomberg | Getty Images

Builder sentiment in the single-family home market dipped into negative territory in August.

The National Association of Home Builders/Wells Fargo Home Market Index fell six points this month to 49, the eighth straight month of decline. Anything over 50 is considered positive. The index has not been in negative territory since the very brief plunge at the start. covid pandemicPrior to that, it had not been negative since June 2014.

“Tight monetary policy by the Federal Reserve and continued rising construction costs have led to a housing recession,” said Robert Dietz, chief economist at NAHB.

Of the three components of the index, current sales fell 7 points to 57, sales forecasts over the next 6 months fell 2 points to 47, and buyers fell 5 points to 32. became.

About one in five builders in August reported lower prices last month to boost sales or limit cancellations, despite rising costs for land, labor and materials. did. The average reported decline was 5% for him.

The biggest hurdle for buyers today is affordability. Home prices have risen since the start of the pandemic, and the average interest rate on his 30-year fixed mortgage, which reached historic lows in the first part of the pandemic, has nearly doubled since the beginning of the year. Home price growth has slowed somewhat in recent weeks, and mortgage rates have fallen from highs.

“The total number of single-family homes will decline in 2022, the first decline since 2011. However, long-term interest rates have remained stable, with some stability, as signs increase that inflation is nearing its peak. For the demand side of the market in the coming months,” Dietz said.

By region, builder confidence in the Northeast fell 9 points to 56 and in the Midwest fell 3 points to 49 on a three-month moving average. It fell 7 points to 63 in the South and fell in the West, where house prices are higher. The best was 51, down 11 points.

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