Confidence among home builders fell for the eighth consecutive month, indicating that the United States has entered a housing recession, according to a Monday release from the National Association of Home Builders.
The group’s Housing Market Index fell by six points in August to 49, marking the first time since the spring of 2020 that the metric has fallen below the breakeven value of 50. The three components of the Housing Market Index — current sales conditions, sales expectations, and traffic of prospective buyers — all declined to their lowest levels in the past two years.
“Ongoing growth in construction costs and high mortgage rates continue to weaken market sentiment for single-family home builders,” NAHB Chairman Jerry Konter said in the release. Mortgage rates began climbing at the beginning of 2022, according to data from government-backed mortgage enterprise Freddie Mac, with 30-year fixed rates beginning at slightly over 3% in January and surging to over 5% as of Thursday.
Single-family homes have witnessed dramatic price increases since COVID and the lockdown-induced recession. In the first quarter of 2022, the median sale price of a home in the United States was $433,100, according to data from the Department of Housing and Urban Development, marking a 34% rise from $322,600 in the second quarter of 2020. Freddie Mac forecasted last month that home prices will grow at 4% in 2023 — a relative slowdown from 17.8% in 2021 and 12.8% in 2022. (Read more from “United States Enters Housing Recession” HERE)
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