Homebuilder sentiment is at a 14-year low
The AI boom is sucking up all the capital. The Federal Reserve is raising rates to try to cool inflation. And one sector is bearing the brunt of the pain from both: housing . The big picture: The situation is lose-lose for both homebuilders and homebuyers. Builders are facing more expensive capital and bidding for scarce construction-related resources. Would-be buyers are being quoted some of the…
Homebuilder sentiment has hit a 14-year low, according to the National Association of Home Builders. The AI boom, rising interest rates, and competition with data center builders are all contributing to the struggles of the housing sector. New September housing starts data shows a 5.2% decline last month, down 7.4% year over year and near post-pandemic lows.
Single-family home starts fell 4.6% to the lowest level since March 2023. Pending home sales also dropped 7.3% last month, the lowest since data was tracked in 2001. The average 30-year fixed-rate mortgage rate reached 7.4% earlier this month, the highest since the fall of 2000. This has put off homebuyers while making it harder for developers to launch new projects.
The combination of high borrowing costs for developers and scarce construction-related resources is squeezing the housing sector. Residential investment has subtracted from overall GDP for five of the last six quarters. While there are efforts to boost housing supply, developers are competing with data center builders for labor and materials, making a building boom difficult.
Immigration policy has also restricted the supply of construction workers, causing delays and discouraging legal workers from reporting to work. The housing affordability crisis is causing broader dissatisfaction with economic conditions in the United States.
Written by urgent.news from Axios's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
