Housebuilder sentiment in the U.S. market for single-family homes plunged into negative territory in August, marking its eight-straight month of continuous decline, which was the worst stretch since the housing market collapsed in 2007 amid higher borrowing costs and elevated prices.
The National Association of Home Builders (NAHB )/Wells Fargo Housing Market Index dropped 6 points into negative territory of 49 in August. The index has not been in the negative territory since July 2014 up until a brief drop at the start of Covid-19 in 2020.
NAHB Chief Economist Robert Dietz said that tighter monetary policy from the Federal Reserve and persistently elevated construction costs have brought on a housing recession. However, there are signs that 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, the Chief Economist added.
Three components of the index consist of current sales conditions that plunged 7 points to 57, sales expectations in the next six months that dropped 2 points to 47 and buyer traffic that fell 5 points to 32.