Did the U.S. enter a Housing Recession? Homebuilders say yes.

SUMMARY POINTS:

– The National Association of Home Builders/Wells Fargo Housing Market Index dropped 6 points to 49 this month, its eighth straight monthly decline.

– This is the first time since the start of the Covid-19 pandemic that the index has been in negative territory.

– The index measures builder sentiment and is used as a gauge for the health of the housing market.

– Builder sentiment has been declining due to higher construction costs and tightened monetary policy from the Federal Reserve.

– Home prices are on the decline, with 19% of builders surveyed saying they’ve cut prices since July.

– If inflation declines in the coming months, conditions within the housing market could improve.

– “Tighter monetary policy from the Federal Reserve and persistently elevated construction costs have brought on a housing recession,” said NAHB Chief Economist Robert Dietz.

August 15, 2022.

The National Association of Home Builders/Wells Fargo Housing Market Index shows that builder sentiment in the market for single-family homes has fallen into negative territory. The index, which measures builder confidence in the housing market, dropped 6 points to 49 this month. This is the eighth straight monthly decline for the index, which hasn’t been in negative territory since a very brief plunge at the start of the Covid-19 pandemic.

The rising cost of mortgage rates and home prices are to blame for the slump in demand within the housing market. Mortgage rates have spiked in response to the Federal Reserve’s move to raise interest rates, making it more difficult for prospective home buyers to afford a new home. Additionally, home prices have reached record highs in many markets across the country, making it even harder for buyers to find a affordable property.

As a result of rising costs of building materials, many builders are struggling to meet the needs of potential buyers. The negative sentiment among builders could lead to a further slowdown in the housing market, making it even more difficult for buyers to find an affordable and comfortable place to call home.

What do The National Association of Home Builders experts say?

“Ongoing growth in construction costs and high mortgage rates continue to weaken market sentiment for single-family home builders.”

“And in a troubling sign that consumers are now sitting on the sidelines due to higher housing costs, the August buyer traffic number in our builder survey was 32, the lowest level since April 2014 with the exception of the spring of 2020 when the pandemic first hit” said NAHB Chairman Jerry Konter, a home builder and developer from Savannah, Ga.

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“Tighter monetary policy from the Federal Reserve and persistently elevated construction costs have brought on a housing recession,”

“The total volume of single-family starts will post a decline in 2022, the first such decrease since 2011. However, as signs grow that the rate of inflation is near peaking, long-term interest rates have stabilized, which will provide some stability for the demand-side of the market in the coming months.” said NAHB Chief Economist Robert Dietz.

See Report from National Association of Home Builders (NAHB)

The NAHB’s latest findings also indicated that home prices are on the decline, with 19% of home builders who responded to the survey saying they’ve cut prices since July to encourage sales or protect against cancellations. Those listings had a median price reduction of 5% off their initial listing price.

69% of builders reported higher interest rates as the reason behind falling housing demand, the top impact cited in the survey.

What does the Housing recession mean for the Dallas-Fort Worth area homebuyers?

The Dallas-Fort Worth area has been one of the hottest housing markets in the country for the past few years. However, there are signs that the market may be cooling off. Interest rates have been rising, and home prices have leveled off or even begun to decline in some areas.

The “housing recession” could actually be good news for home buyers in the Dallas-Fort Worth area. With rising interest rates and concerns about the future of the housing market, many builders are offering incentives to buyers who are willing to purchase now. As a result, there is an overabundance of inventory on the market, giving buyers a wide range of choices when it comes to finding a new home.

So if you’re thinking about purchasing a new construction home, now is the time to take advantage of the current market conditions. I would be happy to help you find the perfect home for your needs and budget.

Get pre-approved for financing with the lender of your choice! The Pre-approval will play a very critical role in current DFW Home Market.

1. With pre-approval you will know What Home Price Can You Afford

2. Your offer will be taken more seriously

3. Preapproval can speed up your final mortgage approval.

Talk to your lender about How To Get Preapproved for the Home loan.

Looking to buy a home in the Dallas-Fort Worth area? Call/text 214.940.8149 today! I would love to help you find your new home in DFW.