Amid surging mortgage rates, U.S. homebuilder sentiment, as measured by the National Association of Home Builders/Wells Fargo Housing Market Index, fell by four points to a seven-month low of 34 in April. A reading above 50 indicates optimism for current and future sales, while a reading below 50 indicates pessimism.
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Trade QQQ with leverage“The year started with hopes for housing momentum growth, but risks with respect to the Iran war, energy costs, and declines for consumer confidence have slowed the market,” said NAHB Chairman Bill Owens.
Housing Costs Rise as Oil Fuels Inflation Fears
Rising oil prices have led to higher building material costs, with 62% of builders reporting that suppliers had hiked prices. Furthermore, 70% of builders had difficulty with pricing homes due to the volatility of materials prices.
Higher energy costs have also fueled inflation concerns, pushing the 10-year Treasury yield higher. The 30-year fixed-rate mortgage is closely linked to the 10-year Treasury yield and rose to as high as 6.46% earlier this month, up from 5.98% in late February.