Homebuilders Say Real Estate Market Worsening

(KNSI) – Housing data continues to come in below expectations.

On Monday, the National Association of Homebuilders released its August Housing Market Index. The HMI showed an eighth straight decline, something not seen since 2007.

A reading below 50 represents a deteriorating real estate market. The index has fallen from 84 in December to 49 this month. The HMI is broken down by region. The Midwest is the lowest at 42, tied with the West. The South is the best, expanding at 54.

Present sales are still doing okay, but there is concern about traffic that fuels future home purchases. The prospective buyers component is at 32. For comparison, it hit 6 in the worst months of the late-2000’s financial crisis and ensuing real estate crash.

Homebuilders are pulling back as affordability concerns spurred by rising interest rates cause traffic to dry up and the future sales picture to become cloudier. Housing starts released Tuesday morning fell by 9.6 percent compared to last month, well below expectations.

Redfin proclaimed last week that real estate has transitioned to a buyer’s market. The number of homes listed for at least a month is up 12.5% nationwide. In Minneapolis, the growth in “stale” listings was much more significant, jumping by 32%.

Nationally, there is now over nine months of supply for new homes, about double the average. Potential buyers are increasingly betting on price cuts in the coming months to solve the current imbalance.

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