The NAHB/Wells Fargo index came in below forecasts and stayed under the key 40 threshold for a 15th straight month, as weak buyer traffic and continued price cuts underscored pressure on new-home demand.
U.S. homebuilder sentiment weakened further in July as high mortgage rates, rising material and land costs, and a persistent shortage of skilled labor continued to weigh on demand. The National Association of Home Builders/Wells Fargo Housing Market Index fell two points to 34 from a revised 36 in June, below the consensus forecast of 35. The July reading marked the 15th consecutive month the index stayed below 40, the level that separates builders who generally view market conditions positively from those who do not. That is the longest such stretch since 2012. All three major components declined, with current sales conditions at 37, sales expectations for the next six months at 43, and prospective buyer traffic at 23. Builders continued to respond by lowering prices. Some 37% of builders reported offering price reductions in July, with the average discount at 6%, as many buyers remained on the sidelines waiting for lower interest rates, clearer inflation trends and improved economic conditions. The prolonged weakness highlights persistent affordability strains in the U.S. housing market and echoes the slow recovery period that followed the 2008 financial crisis.