The U.S. housing market could be on the verge of a “meltdown,” an economist warned following the release of data showing a collapse in homebuilder confidence in July, the New York Post reported. Homebuilder confidence plummeted 12 points to 55 in July, according to data from the National Association of Home Builders/Wells Fargo Housing Market Index. Sentiment has declined for seven straight months and is now at its lowest level since May 2020 — with more trouble potentially ahead for homeowners. “Homebuilders have been in denial about the extent of the drop in demand, despite mortgage applications falling by more than a quarter over the first half of the year, with no end in sight to the decline,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “Now, they are acknowledging reality.” The National Association of Home Builders noted confidence within the housing market has sagged due to the impact of high inflation and rising interest rates that have resulted in “dramatically slowing sales and buyer traffic.” The mortgage rates have compounded difficulties from would-be buyers who have to balance long-term loan commitments against exorbitantly high home prices that surged during the COVID-19 pandemic.
