Welcome back and thank you so much for Joining me in today's video because home Bilder sentiment on a national level has Decreased to lowest levels since December of 2022 this also marks the fourth Consecutive month in which build our Confidence for constructing new single Family houses has also decreased this is Based on a brand new Port from the National Association rors and of course In today's video I'll share all the Details but also have some more news to Share regarding uh the new home Construction industry as well let's First talk about this as well so Builder Sentiment uh this was posted on November 16th which is Thursday so bilder Confidence in the market for building New single family houses according to Them uh fell six points to 34 that Marked the fourth consecutive monthly Drop in their sediment here so something To keep in mind here is that when the Siment is below 50 this means Builders Are actually pessimistic regarding our US housing market any measure above 50 Means that Builders are confident so at 34 Builders are very much pessimistic Right now and here's a chart showing Just that uh the index right now at 34 Uh for October the lowest rating since December of 2022 on top of that I did some digging
For you guys of course and of course I Found an Excel frate I mean it's it Can't be a better day right I'm such a Nerd Anyways I just love looking at data and Sharing it with you guys because you're Not going to get this anywhere else Because no one digs Like I Do Right any Case uh for November sorry this is for The month of November a survey uh for This month not in October I I misspoke Anyways for November the reading is at 34 excluding November last last year and December last year as well as April of 2020 when we had more or less covid Lockdowns Nationwide a reading of 34 is The lowest reading going back to June of 2012 in other words the fourth lowest Reading since June of 2012 on top of That when looking at their index back in Uh November of 2019 obviously preco Level Their index was 71 so this means that Biller confidence is about half as Confident right now compared to that now Here's something I found to be uh really Interesting as well because here's a Look uh in this by the way as on the uh Uh mortgage News daili website here Looking at your average 30-year fix rate Versus Builder confidence so back in 2021 and in early 2022 of course we had Low rates and High biller confidence but When rates started surging in uh what
Was it early 2022 uh through October that really Caused biller confidence to actually Plummet so rates increase confidence Decrease we did see a slight increase in Biller confidence in the first half the First few months of 2023 but that was really due to the fact We had you know very close to all-time Record lows for existing houses for sale And because we had such a lowlevel of Houses for sale a lot of people are Moving to buying a brand new house Because all these Builders were offering All these incentives such as rate buy Downs so when rates were at 6% a builder Could offer a rate at 4.5% for example Or 5% um but when rates uh increase to About 8% these incentives that home builders Were just throwing at home buyers were Not working as compared to earlier uh This year of 20 23 so that is I just Kind of found it interesting that of Course bilder confidence for building New single family houses uh decreases When rates increase right now here's the True impacts regarding biller confidence And how that impacts um um housing Supply so here's a look at biller Confidence again this is the blue line Right here uh going back to 2012 by the Way the red dotted line there is a new Single family housing starts uh seasonly
Adjusted and analyzed according to um The uh US Census buau so when Builder Confidence increases so does housing Starts and of course the housing start Is the beginning phase of the Construction of a brand new house so as You guys can see here in 2013 through uh 2018 Builder confidence as well as Housing starts also increase as well for A single family I compare this to what's Been happening since late 202 2 Builder Confidence decreasing and of course Housing starts in general also Decreasing as well so big picture here a Decrease in um Builder sediment could Cause a decrease of single family Housing starts later and of course this Could limit housing inventory in the Months ahead so you may be asking Yourself what are the components of this Monthly survey from the National Association of home builders it says Here there are three major indices uh For their HMI of course all three of These decrease in November so they look At current sales conditions sales Expectations in the next 6 months and Also traffic from perspective home Buyers each of those fell for the month Of November um also I did some digging For you guys based on this really nerdy Excel spreadsheet here uh current sales Conditions right now fell 6 points to 40 That's the lowest reading to since
January this year tied at 40 um also Sales expectations in the next 6 months Dro 5 Points to 39 that also is the lowest rating since January this year in regards to traffic A perspective home buyers that also Decreased Five Points now it's at 21 the Last time it was this low was back in December of 2022 so bilders overall are responding Here to the survey here seeing we have a Decrease of current sales conditions We're also seeing um a decrease of sales Expectations in the next 6 months and Also a decrease of buyer traffic as well Now something that's really important I Should mentioned um in today's video Here is is this survey here was based on Data for November however though it was Collected for the most part uh before The uh Consumer Price Index or the CPI Report that was announced on I think it Was on Wednesday um that showed that Inflation of course was moderating and More or less ever since then um mortgage Rates have been decreasing going from About 7.7 approximately now it's at 7.4 Per. so the uh response of this survey Here came in at when rates were very Close to 8% so of course the big question is will Builder confidence increase and also Will home buying demand and also Increase uh given the fact that rates
Have fallen by about 60 basis points Compared to about 3 weeks ago now of Course time will tell and I'll Definitely keep you posted also According to the survey here the rise of Interest rates since the end of August Has dampen Builder views of market Conditions as a large number of Prospective buyers were priced out of The housing market more however High Short-term interest rates have increased The cost of financing of home builders And land developers adding another Headwind for housing Supply in a market Uh where of course we have a low amount Of existing houses for sale so the uh Rising of interest rates of course Impacts home buying demand but also Increases further developments of new Houses um that Builders are also Building as well they also talk about How we have a rates above uh 7% ever Since mid August of this year it says in November 36% of Home bilders reported Cutting home prices up from 32% in the Previous two months uh that's also tied With a previous high point that was set Back in November of 2022 so Builders are still offering These incentives in order to drive home Sales and one of those incentives of Course is decreasing home prices Meanwhile proximally 60% of Builders um Provided sales incentives of all forms
Uh this month down slightly from 62% in the previous month and speaking Of a rising rates housing affordability According to a new report from the uh National Association home builders not a Sponsored video by them but I found a Lot of good reports regarding uh new Home construction um in in today's video Here anyways it says Rising rates and of Course uh elevated prices is making Housing affordability drop to all-time Record lows the lowest reading since They started tracking this back in 2012 as you can see right here housing Affordability started decreasing greatly In Q2 2021 of course especially in the late Half of 2022 and early parts of 2023 due to Rising prices and rates now On the supply side though have look at This it says Builders and lenders agree Credit is tightening meaning it's Getting more challeng challenging to Have or to get land acquisition Development and Construction loans from Homebuilders uh this is according to Both their survey and um the Federal Reserve survey of senior loan officers In the third quarter of this year both The um nahb and the FED indices were Negative indicating that Builders and Lenders were once again in agreement That credit was on a net level Tightening in other words more
Challenging to get loans for acquisition Development and Construction so not only Are these availability of these Construction loans uh getting more tight But also interest rates are also Skyrocketing as well uh these rates are Absolutely insane here so look at land Acquisition these are the rates or the Effective rates that home builders are Paying in order to acquire land that's The blue line right here so for Q3 2023 The the effective rate overall is at 11% the lows was set back in more or Less q1 of 2021 when the rate was approximately 6% So rates have more or less doubled ever Since then for Land Development same Scenario the 11% rate right now the Lowest was around 7% land uh or single Family construction I'm speculative this Is uh a a construction loan in which the Builder plans to sell the house uh but It's not sold yet that's the green line Right now or at least for Q3 this year Approaching 14% right now the lowest What set back in 2021 at just over 7% so Rates have more or less doubled uh since Then in regards to single family Construction that's pre-sold that is Actually a little bit higher at around Uh 14.5% compared to the lows of around 7.5% something else that I noticed that You guys may have noticed as well is
That all these rates right now are well Above the rates we saw uh during preco Levels in 2018 and 2019 when the rate um hovered around 8% To around 10% and now those same rates Are in the range of 11% to nearly 15% Right now so the uh true impacts Regarding our housing market Home builders home buyers is that when These rates increase greatly of course That de Incentivize um home builders to start Construction of brand new houses and of Course when that happens that will limit Housing inventory of brand new home Construction in the months and years Ahead and lastly here's a report I want To share with you guys as well regarding The prices of building materials here it Says according to the latest uh producer Price index report or the PPI announced On uh I think it was on Wednesday if I'm Not mistaken uh the price level of Inputs to residential construction or Building materials decreased by. 1% in October following a 2% increase in September so prices overall were Increasing in September now they're down Slightly down by 0.1% the index has now increased by only 1% year-to date that's January through October this year marking the smallest Year-to dat gain through October of Course since it fell by. 1% over the
First 10 months of 2019 now something that caught my Attention regarding this is that during Prepandemic levels overall building Material prices were at very low levels Especially compared to right now so During 2020 through 2022 I'd say early 2022 prices overall surge big time uh in Index went from around 112 to 148 so Even though we're not seeing those same Price increases overall ever since Really January 2022 prices have been relatively flat so Just taking a step back here it's nice To see that prices are not skyrocketing Like they did uh during 2021 in 2022 yet we're not seeing the same Increases but we're still maintaining at Relatively high levels compared to at Least 2019 and early 2020 the National Association home Builders also looked at various uh Components of Residential Building Materials as well so looking at gypson Building materials um that has been more Or less on a downward Trend here so the Last time prices uh increase was way Back in March of 2023 ever since then they have decreased By 3.5% in the 7 months since then prices Are now 1.4% lower than they were in October of 2022 but again I'll mention this again
Here we saw a huge increase in prices of Drywall here in 2021 through uh mid 2022 but ever since then more or less Flat but maintaining at relatively high Levels uh especially compared to 2019 also year to date through October The index for gypson building materials Has decreased by 1.6% in contrast it surged by 10.9 and 17.9% over the first 10 months of 2022 And 2021 the Year date uh October increase Has averaged a gain of 2.8% since 1995 so this year year-to dat we're down 1.6% but overall the historical average Is a gain of 2.8% but again I wouldn't say this a Reason for celebration given the fact That we're still at very high levels Right now now when looking at uh still Meal products here um it's actually a Little bit different story here so that Actually decreased by 2.5% in October so Steel has decrease in each the past 5 Months uh for a total of 12.5% reaching its lowest levels since March of 2021 so we saw a sharp increase Uh during that same time frame but ever Since then a fairly sharp decrease so We're still above uh levels in 2019 and The early parts of 2020 but much lower Compared to the peak set back in October
Is of 2021 it's also quite a bit different Story here for softwood lumber because Lumber has been uh declining big time Ever since really uh uh the spring month Of 2022 uh so uh the PPI for software Lumber decreased by 2.8% in October Following a 1.3% increase in September The index has fallen 12.1% over the past year and is 52.3% um lower than the alltime record Highs that was set back in 2021 in regards to ready mixed concrete That increased by 8% in October uh this Is a look at year-over-year changes of Ready mixed concrete prices here you Know surging during this time frame Right here um but it was going down but More recently started increasing once Again so right now the year Vie change Is a gain of around 11.5% so with that said please comment Below your biggest takeaways from Today's video also if you guys got any Value out this video whatsoever then Please hit like button appreciate that Of course I appreciate you hope you guys Have an awesome day like And subscribe And I'll see you on the next Video [Music]
