NAHB Housing Market Index Drops As Mortgage Rates Climb To A 23-Year High

Key Insights

• NAHB Housing Market Index decreased from 45 in September to 40 in October. 
• NAHB noted that younger buyers were priced out of the market due to high interest rates. 
• SP500 rebounded from session lows as traders bet on a less hawkish Fed. 

On October 17, the National Association of Home Builders released NAHB Housing Market Index report for October. The report indicated that NAHB Housing Market Index declined from 45 in September to 40 in October, compared to analyst consensus of 44.

NAHB commented: “Builders have reported lower levels of buyer traffic, as some buyers, particularly younger ones, are priced out of the market because of higher interest rates.”

NAHB also noted that high interest rates have increased the cost of builder development and construction loans, leading to lower supply.

According to the report, 32% of builders reported cutting home prices in October. The average price discount remained at 6%. Freddie Mac data indicates that mortgage rates have climbed above the 7.50% level, so it remains to be seen whether price cuts from home builders will provide material support to housing market activity.

Today, traders also had a chance to take a look at the Industrial Production report for September, which indicated that Industrial Production increased by 0.3% on a month-over-month basis.

U.S. Dollar Index pulled back towards 106.20 as traders reacted to the housing market data. Traders ignore rising Treasury yields and bet that Fed will not raise rates again this year.

Gold moved towards the $1930 level as traders focused on U.S. dollar’s pullback. Rising demand for safe-haven assets provides additional support to gold.

SP500 moved away from session lows and climbed above the 4360 level after the release of the NAHB Housing Market Index report. The disappointing report provided some support to stocks as traders bet on a less hawkish Fed.

For a look at all of today’s economic events, check out our economic calendar.