The National
Association of Homebuilders (NAHB) reported on Tuesday that its housing market
index (HMI) fell to 32 in June from an unrevised May
reading of 34.
This marked the lowest reading since December
2022 (31).
Economists had forecast the HMI to rise to 36.
A reading below
50 indicates more builders view conditions as poor than good.
According to
the report, all three major HMI
components registered declines in early June. The component tracking current
sales conditions fell by 2 points to 35, while the component charting sales
expectations in the next six months also dropped by 2 points to 40, and the
component measuring traffic of prospective buyers decreased by 2 points to 21,
the lowest reading since November 2023.
Commenting on
the latest report, NAHB Chairman Buddy Hughes noted that buyers are
increasingly moving to the sidelines due to elevated mortgage rates and tariff
and economic uncertainty. “To help address affordability concerns and bring
hesitant buyers off the fence, a growing number of builders are moving to cut
prices,” he suggested.
Meanwhile, NAHB
Chief Economist Robert Dietz said that rising inventory levels and prospective
home buyers who are on hold waiting for affordability conditions to improve are
resulting in weakening price growth in most markets and generating price
declines for re-sales in a growing number of markets. “Given current market
conditions, NAHB is forecasting a decline in single-family starts for 2025,” he
added.