US homebuilder confidence has dipped to its lowest point since December 2023, with the single-family homes index registering a reading of 42 for July. The National Association of Home Builders (NAHB) CEO Jim Tobin joins Wealth! to share his outlook on the housing market.
Tobin attributes the decline of recent gains in the housing market to the persistence of high interest rates. With mortgage rates hovering near the 7% mark, he observes that "demand is being suppressed by mortgage rates."
Tobin emphasizes the role of interest rates in its relationship to mortgage rates: "We're really going to need to see those [mortgage] rates come down to mid-sixes [percent]." Tobin also highlights an often overlooked aspect of the industry: acquisition..
"One of the lifebloods of homebuilding is acquisition, development, and construction (AD&C) lending," Tobin tells Yahoo Finance, noting that the cost of this lending has surged by nearly 14%, further complicating the landscape for builders.
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Despite these challenges, Tobin points out that the American Southeast continues to be a robust area for new home construction and homebuyers.
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This post was written by Angel Smith