Builder sentiment showing weaker knees in the face of both demand and supply challenges

The September NAHB home builder survey index fell 5 pts to back under 50, for the first time since April, at 45 and compares with 56 in July. The estimate was for a 1 pt drop to 49. Current conditions were down by 6 pts to 51 while the outlook was lower by 6 pts to 49. Of note too was the 5 pt decline in Prospective Buyers Traffic to just 30 which is the lowest since February.

Sentiment is getting squeezed on both sides. The demand challenge is obvious as “High mortgage rates are clearly taking a toll on builder confidence and consumer demand, as a growing number of buyers are electing to defer a home purchase until long term rates move lower” said the NAHB.

With regards to supply, “builders continue to grapple with shortages of construction workers, buildable lots and distribution transformers, which is further adding to housing affordability woes.” Those transformers are needed to connect the new home to the grid essentially. And there is the new worry which I’m sure you’ve all been reading about, “Insurance cost and availability is also a growing concern for the housing sector.”