US homebuilder confidence just crashed to its lowest level since 2012

The NAHB/$Wells Fargo(WFC.US) Housing Market Index fell 3 points to 29 in October, the lowest reading since June 2012. Economists polled by Reuters expected 31

Every part of the survey got worse. Current sales fell 2 points to 33, sales expectations for the next six months dropped 5 points to 32, and buyer traffic sank 5 points to 18, its weakest since April 2012 outside the pandemic's onset

Builders are slashing prices to move homes. A record 43% cut prices in October, the highest share in NAHB's data going back to 2020, with the average cut stuck at 6% for a seventh straight month. 65% are using sales incentives, the 19th straight month above 60%

The driver is rates. The 30 year fixed mortgage averaged 7.40% last week per $Freddie Mac(FMCC.US), the highest in nearly three years, as the Iran war pushes oil and inflation higher and drags Treasury yields up with them. Builders also flagged rising costs for materials, construction loans and diesel, and more than a third reported immigration enforcement in their markets delaying jobs

Housing is where higher rates bite first. Stocks bounced on AI this morning, but builders are saying the rate shock has already reached Main Street. A record share cutting prices while buyer traffic sits at 2012 levels means something has to give, either mortgage rates come down or home prices do. And with the midterms on Nov 3, affordability is now a political problem too

Source: StockMarket.News