Homebuilder Sentiment Crashes
(00:00.502)
Okay, the economic news I want to focus on today is home builder sentiment. And it, it fell off a clip. Um, drops to a number. The reading is 50, six points to 50. Um, that is the first decline in seven months to lowest level since May. Um, anything over 50 it’s at 50 is considered positive. Now, why home builder sentiment?
What are home builders feeling right now? Let me translate this for you. Mortgage rates are high. Mortgage rates are high, and home builders out there are not going to be making as much money. They’re not. They’re not gonna be making as much money because, again, people going out and buying new homes have to go out and take a mortgage. Mortgage rates are above 7%.
They’re also talking about some of the costs when it comes to workers and construction costs and factoring that in. But let’s be honest, okay, we don’t have the supply chain issues that we had not too long ago. So building materials most certainly have come down in price. However, again, builders are going to do what builders are going to do. Is this going to affect their profitability? Absolutely. And quite frankly,
They’re the last leg that’s standing right now. And it’s a part of the problem that we have with housing. Because interest rates went up to basically parabolic, in a very, very short period of time. Mortgage rates, I mean, it wasn’t too long ago you could get a mortgage rate below 3%. We’re now over.
7%. Now, what this does, you can call it a mirror of different things. You can call it, maybe call it golden handcuffs, mortgage handcuffs, whatever it may be. Many people that may have been considering selling their home are like, screw that noise, I ain’t selling. I don’t, unless of course they’re gonna buy their next house in cash, because you take a look at a mortgage rate that’s.
(02:26.978)
you know, at ridiculously low levels, two, 3%, that’s looked at as almost like it’s a financial asset to some degree. You know, one of the things that we’ve been bouncing around and I think that, you know, you might wanna, people might wanna consider to free up some of these homes is to allow, maybe allow mortgages to be transferred. I guess you can, certain lenders will allow you to do that but allow you to actually move the loan over to.
to somebody else, again, it’s a little bit on the, yeah, not everybody is allowed to do that. But anyway, because of these higher rates, obviously homes are not hitting, existing homes are not hitting the market and we don’t have the supply. Like I said, normally when you have mortgage rates go up, existing homes will also come down in price. They’re not because nobody’s selling.
And this is the issue we have right now. So again, do I think that home builders are going to be pulling back? Not necessarily, but are they going to most certainly have to start doing a bit of a self-correct when it comes to their pricing? Yes, they are. And I’m gonna be honest with you, okay? You know, don’t cry for me, Argentina, okay? Because when…
Housing markets are going like gangbusters. These home builders overcharge like you can read about. I see it again and again and again. And I’m seeing some of the deals. I get, I’m on a million different email lists out there. Oh, Toll Brothers just emailed me and I buy some Toll Brothers over here. They’re gonna give me up a low market mortgage rate and they’re gonna find all sorts of deals and incentives to start moving these homes. Believe me, that’s what they do. Watchdog on wallstreet.
