High Housing Prices Concern the Nation's Homebuilders

High prices and rising mortgage rates are called a "toxic cocktail" for the homebuilding industry.
November 20, 2018, 5am PST | James Brasuell | @CasualBrasuell
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Irina Mos

Diana Olick shares news of the latest National Association of Home Builders/Wells Fargo Housing Market Index, which finds declining confidence among the homebuilding industry in the United States.

"Sentiment among homebuilders dropped 8 points in November to 60 in the National Association of Home Builders/Wells Fargo Housing Market Index. That is the lowest reading since August 2016, but anything above 50 is still considered positive. The index stood at 69 in November of last year and hit a cyclical high of 74 last December," according to Olick.

The reasons for declining confidence in the industry show the housing crisis finally catching up with the businesses most likely to profit off a healthy market. High housing prices and rising mortgage rates are inspiring more caution from potential buyers.

"Of the index’s three components, current sales conditions fell 7 points to 67, sales expectations in the next six months dropped 10 points to 65, and buyer traffic registered an 8-point drop to 45. Buyer traffic had broken out of negative territory earlier this year but now appears to be back in it solidly."

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