Persistently high mortgage rates continue to dampen market sentiment, as evidenced by a report from the National Association of Home Builders (NAHB) released on Tuesday. The report indicates that homebuilder confidence in the U.S. unexpectedly declined in July.
The NAHB/Wells Fargo Housing Market Index dipped to 42 in July, a slight decrease from 43 in June. Economists had forecasted a minor increase to 44.
This unexpected drop has brought the housing market index to its lowest point since it last hit 37 in December.
"While prospective buyers seem to be holding out for lower interest rates, builders' six-month sales expectations have improved, suggesting an anticipation of decreasing mortgage rates later this year, supported by signs of easing inflation," said NAHB Chairman Carl Harris.
According to the NAHB, the index reflecting current sales conditions and the metric tracking traffic of prospective buyers both decreased by one point to 47 and 27, respectively. However, the component measuring sales expectations for the next six months rose by one point to 48.
The July HMI survey also revealed that 31 percent of builders reduced home prices to stimulate sales, an increase from 29 percent in June.
Despite this, the average price reduction remained steady at 6 percent for the thirteenth consecutive month. Additionally, the use of sales incentives remained unchanged at 61 percent in July, according to the NAHB.
