The National
Association of Homebuilders (NAHB) reported on Tuesday its housing market index
(HMI) dropped to 42 in June from
an unrevised May reading of 43. This represented the lowest reading since December 2023 (37).
Economists had expected the HMI to rise to 44.
A reading over
50 indicates more builders view conditions as good than poor.
Two of three major
HMI components showed decreases in early June. The
component tracking current sales conditions and the component measuring traffic
of prospective buyers both declined by one point to 47 and 27 respectively. Meanwhile,
the component charting sales expectations in the next six months increased one
point to 48.
Commenting on
the latest report, NAHB Chairman Carl Harris noted that the six-month sales
expectation for builders moved higher, indicating that builders expect mortgage
rates to edge lower later this year as inflation data are showing signs of
easing.
Meanwhile, NAHB
Chief Economist Robert Dietz noted though inflation is still above the Federal
Reserve’s target of 2%, it appears to be back on a cooling trend. “NAHB is
forecasting Fed rate reductions to begin at the end of this year, and this
action will lower interest rates for home buyers, builders and developers,” he
added.