It marks the seventh straight month of gains and the highest level since June 2022. A reading above 50 is considered positive sentiment.
Builders say low supply in the resale market is driving demand for new construction, but higher mortgage rates and supply-side challenges continue to put pressure on the market.
The average rate on the popular 30-year fixed mortgage crossed over 7% briefly in May and then again at the end of June. It has only come down slightly in the last week. Those higher rates are straining affordability in the market, where prices for existing homes are rising yet again.
Of the NAHB index’s three components, current sales conditions in July rose 1 point to 62; buyer traffic increased 3 points to 40, the highest reading since June of last year; and sales expectations in the next six months fell 2 points to 60.
The drop in expectations is due to that jump in interest rates and the resulting hit to affordability.
Despite higher mortgage rates, however, builders are using fewer incentives. Just 22% of builders reported cutting prices in July. This is down from 25% in June and 27% in May.
