Builder sentiment a bit better but mood still sour
The May NAHB home builder sentiment survey rose 3 pts to 37 and better than the estimate of no change but still remaining well below the breakeven of 50. The key component that is Prospective Buyers Traffic on the demand side rose 3 pts after falling by a like amount in April but at just 25, it’s half the breakeven level.
The NAHB said “The housing market remains soft as higher mortgage rates, rising gas prices and economic uncertainty related to the war in Iran continue to dampen buyer demand.”
On what builders are doing to drive better demand, “The latest HMI survey also revealed that 32% of builders cut prices in May, down from 36% in April. The average price reduction was 6%, up from the 5% figure in April. The use of sales incentives was 61% in May, up slightly from 60% in April, and marking the 14th consecutive month this share has reached 60% or higher.”
Bottom line, nothing new here as we know all about the affordability challenges that particularly afflicts the young first time buyer. And now we have another move up again in mortgage rates.
Doug Kass is a world-renowned hedge fund manager with decades of experience and success navigating through some of the most turbulent periods in market history. He is known for his time-tested analytical skills and ability to look past the current noise and herd mentality.
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