A new report showed U.S. homebuilder confidence fell every month this year, as sales fell in Las Vegas and across the country and buyers faced “worsening affordability.”
Builder confidence in the market for new single-family homes fell for the 12th consecutive month in December, the National Association of Home Builders reported Monday. In a news release, the industry group cited higher mortgage rates, higher construction costs and “deteriorating affordability conditions as a drag on consumer demand,” all of which “weighed down manufacturing sentiment every month in 2022.”
Its most recent survey showed that 62 percent of builders are using incentives, including price reductions, to boost sales, President Jerry Konter said in the release.
“In this high inflation, high mortgage rate environment, builders are struggling to keep housing affordable for home buyers,” he said.
Robert Dietz, the association’s chief economist, noted that mortgage rates have declined in recent weeks, but the group still expects “weaker housing conditions” to continue next year.
Locally and nationally, home buyers have been hitting the brakes hard for months, after last year’s cheap shopping spree. The Federal Reserve has raised interest rates several times this year to fight inflation, and rising borrowing costs have led to fewer home sales.
In Southern Nevada, sales have fallen sharply from year-ago levels, sellers have been slashing prices, and builders are offering more incentives to buyers and higher commissions to agents who bring them in.
Builders recorded 350 net sales — new purchase contracts signed without cancellations — in southern Nevada in October, down 59 percent from the same month last year, Las Vegas-based Real Estate Research reported. .
Builders also drew 545 new home permits in October, down 55 percent year-on-year, reflecting a sharp drop in construction plans, and land purchases were “essentially nonexistent,” said Andrew Smith, the firm’s president. wrote the study.
Nationally, the pace of home sales fell several times this year, although in October, it was up 7.5 percent from September but still down 5.8 percent from a year earlier, federal data showed. they do
Touchstone Living founder Tom McCormick, whose Las Vegas homebuilding firm targets first-time buyers, told the Review-Journal late last month that the Southern Nevada market is “much slower,” and buyer traffic is down from last year’s levels. .
Many people can’t afford a mortgage because they can’t afford the higher payments that come with rising interest rates, he noted.
“Our customers definitely feel it,” McCormick said.
Last week, the average rate on a 30-year mortgage was 6.31 percent, up from 7.08 percent a month earlier, but still up from 3.12 percent a year ago, federal data show.
“The good news for the housing market is that the recent decline in rates has led to a stabilization of purchasing demand,” Sam Khater, chief economist at mortgage broker Freddie Mac, said in a news release last week. “The bad news is that demand remains very weak in the face of affordability constraints that are still very high.”