Builder confidence softens further/Zillow highlights growing inventory

The July NAHB home builder sentiment index fell 1 pt m/o/m to 42, the lowest since December and well below the breakeven of 50. The Present Situation and Expectations components were little changed at 47 and 48 respectively. The real problem for the industry is while there is a need for more housing supply, at current prices and mortgage rates, the demand is somewhat muted. Evidence of this, Prospective Buyers Traffic came in at just 27, also the weakest since December.

Of note, the NAHB said “that 31% of builders cut home prices to bolster sales in July, above the June rate of 29%. However, the average price reduction in July held steady at 6% for the 13th straight month. Meanwhile, the use of sales incentives held steady at 61% in July, the same reading as June.”