The National Association of Home Builders/Wells Fargo Housing Market Index, a survey designed to gauge market conditions, found builder sentiment dropped 12 points to 55 in July. That marked the largest one-month drop in the survey’s 37-year history with the exception of April 2020, when the reading plummeted 42 points to 30 during the pandemic lockdown.
The S&P 500 Homebuilding Index, which is highly correlated with the NAHB index, rose 20% from June 16 through Friday, July 15. However, the index doesn't bode well for the industry for now (chart).
The problem is housing affordability fell as the median single-family new home price soared by an astonishing 41.6% over the past 24 months through May (chart). The jump in mortgage rates exacerbated the affordability problem.
Americans are canceling deals to buy homes according to a new report from Redfin. The share of sale agreements on existing homes canceled in June was just under 15% of all homes that went under contract. That's the highest since early 2020 during the lockdown.