Homebuilder Sentiment Falls for Ninth Straight Month

Cam White | September 20, 2022

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Jeff Zananiri

Single-family home builders’ confidence continues to wane this month… the ninth in a row. 

Experts feared that the National Association of Home Builders/Wells Fargo Housing Market Index would drop down to 47. 

Instead, it came in at 46 – the lowest since May 2014 (when you pull the Covid plunges out of the equation). For comparison, back in January, that rating was at 83.

Citation: https://www.nahb.org/news-and-economics/housing-economics/indices/housing-market-index 

The index measures home builders’ expectations of sales and traffic over the next six months and calculates a seasonally adjusted score.  Any reading below 50 means conditions are viewed as poor. 

Essentially, the problem is twofold: 

  • Homebuilders continue dealing with high costs for land, materials and labor.
  • With mortgage rates breaking 6%, potential homebuyers are turning to rentals as their only option. 

And there’s no end in sight… which presents a unique opportunity for traders.

In particular, construction of multi-unit dwelling projects increased 28% in August, compared to a small 3.4% uptick in single-family housing starts.  

To see how we got here, where we’re headed with housing, and where I see potential for traders – check out my “Landlord Nation” expose right here.