Sentiment of homebuilders in the U.S. continues to decrease for 12 months in a row

Higher mortgage rates and high building costs in 2022 caused a drop in sentiment among homebuilders in the U.S. In December, the National Association of Home Builders (NAHB) index reached its lowest level since June 2012, except for the beginning of the COVID-19 pandemic. Currently, it stands at 31, which shows a decline by 2 points. The year-to-date decrease is the longest in the history of observation.

As a result of the Fed's aggressive actions to fight inflation, quick increases in mortgage rates suppressed demand for homes. On the other hand, building became more expensive because of higher material and labor costs. Homebuilders became influenced by these factors.

Sales expectations for the next six months rose for the first time since April, giving a more positive perspective. In general terms, however, expectations remain extremely depressed.

Robert Dietz, NAHB chief economist, predicts a continuation of weak conditions in 2023 and a recovery in 2024.