US builder confidence plunges as mortgage rates near 7% mark in August

Posted on August 18, 2023   |  

Builder confidence declined in August after a steady 7-month rise due to nearing 7% mortgage rates and high shelter inflation.

August's Housing Market Index (HMI) fell 6 points to 50 for new single-family homes.

Shelter inflation is up 7.7% from last year, driving 90% of July's Consumer Price Index reading of 3.2%.

Need for housing solutions urgent as builder confidence weakens and housing units shortage reaches 1.5 million.

Rising mortgage rates prompt more builders to use sales incentives; 25% cut prices, and 55% use incentives to attract buyers.

All key HMI indices declined in August: current sales, sales expectations, and prospective buyer traffic.