The NAHB/Wells Fargo Housing Market Index fell three points to 29 in October, its lowest reading since June 2012. The 30-year fixed mortgage rate averaged 7.40% last week, the highest in nearly three years, according to Freddie Mac. The bottom line: high rates are swamping whatever good news builders have had.
Builders Feel the Squeeze
Jim Tobin, CEO of the National Association of Home Builders, made that case on Fox Business’ “Varney & Co.” on Monday. Host Stuart Varney noted that NAHB expects single-family home building to fall at least 4% this year and 3% next year, and asked whether mortgage rates of 7.5% explain it. “It is unfortunate that mortgage rates just eating up all the good news out there on housing,” Tobin said. “It’s really a challenge for us.”
He conceded the administration has scored “some good regulatory and legislative victories”, but said higher rates are “just gobbling up the headlines.”
Costs, Cancellations and a Bleak Forecast
Economist Peter Schiff posted on X the same day that inflation, tariffs and immigration policy have sent construction costs soaring, while rising mortgage rates make higher-priced homes even harder to buy. His verdict: “This will be the worst housing market in U.S. history.”
Other numbers point the same way. Redfin data showed 14.5% of home-purchase agreements fell through in September, the highest share for any September on record. Pending home sales dropped 4% from the month before. Schiff also called the market a “disaster waiting to happen” last week, after shares of Fannie Mae and Freddie Mac fell sharply.
A Split Market
Varney said luxury builders are doing fine while those serving the middle class are hurting. Tobin agreed on where the help is needed. “It’s that lower end tier that we really have to help,” he said, adding that regulatory burdens need to come out of the way to bring costs down.
Asked about claims that the American Dream is dead, Tobin pushed back. “It is absolutely alive and well, it may be delayed, but it is absolutely not dead,” he said. “This is about supply. This is about building.” In his view homeownership “will always be the gateway to the middle class in this country.”
He also urged buyers to move. “Now is the time to buy,” Tobin said. “If you can afford the mortgages of today, the homes will be more affordable today than they will be in five years.” Anyone waiting to time the market, he added, “will always be wrong.” Varney remarked that Tobin has to say that as a representative of home builders. “No, no, I believe that wholeheartedly,” Tobin replied.
Sources
- Mortgage Rates Are ‘Eating Up All the Good News’ on Housing, Says NAHB CEO — Peter Schiff Warns of ‘Worst Housing Market in US History’
- Mortgage Rates Are ‘Eating Up All the Good News’ on Housing, Says NAHB CEO — Peter Schiff Warns of ‘Worst Housing Market in US History’
- San Diego Union-Tribune
Photo: APK (CC BY 4.0)
