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16.07.2024

U.S. homebuilder confidence unexpectedly worsens in June

The National Association of Homebuilders (NAHB) reported on Tuesday its housing market index (HMI) dropped to 42 in June from an unrevised May reading of 43. This represented the lowest reading since December 2023 (37). 

Economists had expected the HMI to rise to 44.                                                                                                       

A reading over 50 indicates more builders view conditions as good than poor.

Two of three major HMI components showed decreases in early June. The component tracking current sales conditions and the component measuring traffic of prospective buyers both declined by one point to 47 and 27 respectively. Meanwhile, the component charting sales expectations in the next six months increased one point to 48.

Commenting on the latest report, NAHB Chairman Carl Harris noted that the six-month sales expectation for builders moved higher, indicating that builders expect mortgage rates to edge lower later this year as inflation data are showing signs of easing.

Meanwhile, NAHB Chief Economist Robert Dietz noted though inflation is still above the Federal Reserve’s target of 2%, it appears to be back on a cooling trend. “NAHB is forecasting Fed rate reductions to begin at the end of this year, and this action will lower interest rates for home buyers, builders and developers,” he added.

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