US homebuilding sentiment falls in May with high mortgage rates

By Ovunc Kutlu

ISTANBUL (AA) - Homebuilding sentiment in the US declined in May as mortgage rates have averaged above 7% for the last four weeks, according to a report released on Wednesday.

The National Association of Home Builders/Wells Fargo Housing Market Index fell six points to 45 in May, from 51 in April when it was at its highest since July 2023.

"Builder sentiment posted its first decline since November 2023," said the report.

While above 50 is considered positive for the housing sector, the index measures sentiment among homebuilders and it is considered an important indicator for housing investment and consumer spending on appliances and furnishings, which affect the overall economy.

"The market has slowed down since mortgage rates increased and this has pushed many potential buyers back to the sidelines," Carl Harris, chair of the homebuilders' group, said in a statement.

Robert Dietz, the association's chief economist, said: "A lack of progress on reducing inflation pushed long-term interest rates higher in the first quarter and this is acting as a drag on builder sentiment."

"The last leg in the inflation fight is to reduce shelter inflation, and this can only occur if builders are able to construct more attainable, affordable housing," he added.