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) top executive Jim Tobin joins Wealth! to share his outlook on the housing sector.
Tobin attributes the decline of recent gains in the housing sector to the persistence of high finance charge rates. With property loan rates hovering near the 7% mark, he observes that “demand is being suppressed by property loan rates.”
Tobin emphasizes the role of finance charge rates in its relationship to property loan 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 sector: acquisition..
“One of the lifebloods of homebuilding is acquisition, development, and construction (AD&C) lending,” Tobin tells Yahoo money management, noting that the cost of this lending has surged by nearly 14%, further complicating the landscape for builders.
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