Homebuilder sentiment slipped for the fourth month in a row in April as rising construction costs, home prices, interest rates and supply chain woes continue to take a toll.
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The National Association of Home Builders/Wells Fargo Housing Market Index released Monday showed builder confidence fell to 77 this month, down two points from March and the lowest reading on the index since it hit 76 in September. A score of more than 50 shows more builders view the conditions as good versus poor.
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“The housing market faces an inflection point as an unexpectedly quick rise in interest rates, rising home prices and escalating material costs have significantly decreased housing affordability conditions, particularly in the crucial entry-level market,” said NAHB chief economist Robert Dietz.
Mortgage rates reached 5% last week, a high not seen in more than a decade. Since the start of the year, rates have climbed more than 1.9%.
Meanwhile, the median home price in the country hit a new record high of $405,000 last month and the cost of materials continues to soar – leading to more buyers being priced out of the market.
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“Despite low existing inventory, builders report sales traffic and current sales conditions have declined to their lowest points since last summer as a sharp jump in mortgage rates and persistent supply chain disruptions continue to unsettle the housing market,” NAHB Chairman Jerry Konter said in a statements.
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“Policymakers must take proactive steps to fix supply chain issues that will reduce the cost of development, stem the rise in home prices and allow builders to increase production,” he added.