The sentiment in the U.S. housing market has fallen to its lowest level in 14 years. Analysts attribute this decline to high mortgage rates and rising construction costs, which are worsening the outlook for home builders.
According to the International Financial Center on October 20, the National Association of Home Builders (NAHB) reported that the housing market index for October dropped to 29, down 3 points from the previous month’s 32. This marks the lowest level since 2012.
The NAHB housing market index reflects the market conditions as perceived by home builders. A score below the baseline of 50 indicates that more builders view the market negatively than positively.
The decline in the index is seen as a result of a combination of high mortgage rates, a shortage of construction labor, and rising raw material costs. As financial burdens increase for home buyers, builders are also struggling with higher labor and material expenses.
The outlook for the housing market remains bleak. Builders’ expectations for home sales over the next six months have fallen to their lowest level since November 2022. This reflects concerns that the current market slump may not be resolved quickly.
The downturn in the U.S. housing market is also linked to the potential for prolonged high interest rates. On October 19, the yield on the U.S. 10-year Treasury note rose by 7 basis points to 5.14%, compared to the previous trading day. Rising international oil prices and the likelihood of sustained high interest rates have been identified as key factors behind the increase in Treasury yields.
As both housing market sentiment deteriorates and market interest rates rise, uncertainty about the timing of a recovery in the U.S. housing sector is growing.
* This article has been translated by AI.
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