Persistently high mortgage rates around 7% and elevated construction financing costs are dampening builder sentiment significantly.

In June, the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) reported a drop in builder confidence to 43, down from May's 45 and marking the lowest since December 2023. The housing market struggles amidst stagnant progress in reducing shelter inflation, currently at 5.4% annually, complicating Federal Reserve efforts to reach a 2% inflation target. Increasing the housing supply with favorable loan interest rates is crucial to addressing these challenges.

The survey also highlighted that 29% of builders lowered home prices in June, the highest since January 2024, while sales incentives rose to 61%. All HMI components declined below 50 for the first time since December 2023, reflecting subdued market conditions.

Regional HMI scores showed mixed results, with the Northeast holding steady at 62, the Midwest and South declining, and the West also seeing a slight decrease.

For more detailed information, visit nahb.org/hmi.