US Housing Market Sentiment Plummets to 14.5-Year Low Amid Iran War Pressures
US housing market sentiment plunges to a 14.5-year low as the war with Iran fuels inflation, pushing 30-year mortgage rates to 7.4% and dropping Donald Trump approval to 37%.
Donald Trump approval rating drops to 37% as the war with Iran drives up inflation, mortgage rates, and construction costs, pushing US housing market sentiment to a 14.5-year low.
Construction Sentiment Plummets
The National Association of Home Builders (NAHB) and Wells Fargo housing market index plunged this month to 29, the lowest level since June 2012. The decline is driven by labor shortages in the construction sector resulting from stringent immigration enforcement, alongside a 28.8% surge in building material prices in September compared to the same period last year. A reading below 29 indicates deep pessimism regarding market conditions.
Mortgage Rates and Financing Pressures
In recent weeks, the average rate on a 30-year fixed mortgage climbed to 7.4%, the highest level in nearly three years, according to data collected by Freddie Mac. High borrowing costs, climbing alongside US Treasury yields due to war-related inflationary pressures, are heavily burdening the housing market.
"Contractors are dealing with higher construction loan costs, building materials, and diesel, in addition to ongoing labor shortages," said NAHB Chairman Bill Evans. "Nationwide, more than a third of homebuilders reported immigration enforcement activity in their areas just in the past month, which led to construction delays and caused even legal workers to avoid coming to work."
Market Stagnation and Future Outlook
Contractors are simultaneously dealing with an excess supply of new homes, leading to the postponement of new projects. The share of builders reporting price cuts in an attempt to attract customers jumped in October to 43%, while the average price cut remained unchanged at 6% for the seventh consecutive month. Existing home sales fell in September by 4% compared to the previous month to a 14-year low, according to Redfin, with 14.5% of deals falling through—the highest rate ever recorded. Analysts do not foresee improvement in the foreseeable future, with Oxford Economics expecting the housing market to remain stagnant through 2027.
