As recent polls have shown, more and more Americans think Joe Biden is failing on the economy, and a recent steady decline in home sales could spell disaster for any kind of recovery.
In a recent interview with Fox News, Jerry Howard, CEO of the National Association of Home Builders, said that the housing market decline is a “bad sign” for the American economy.
“Our own Wells Fargo NAHB Housing Market Index (HMI) declined three points this month because builders are saying things are going to ‘dry up.’ You’ve got a combination of the costs…regulatory compliance, and now at the other end of the pipeline, interest rates are going up,” Howard told the host of “Cavuto: Coast to Coast.”
The housing expert made these comments after pending home sales declined for the fourth consecutive month in February. Howard said he’s “very worried” that the market could “really slow down.”
Cavuto then asked Howard if part of the decline is that customers are walking away if they’re preapproved for a mortgage, and the price happens to increase significantly over the course of the home being built.
Howard said yes that his organization is seeing that consumers have walked away even before signing their housing contracts, and this has been an issue nationwide.
“What builders are doing to avoid that…is they’re putting escalator clauses into their contracts,” he explained.
“[Customers] come in and say, ‘You want to build a house?’ I’ll tell you how much I think it’s going to cost, but I’ll also say ‘I can’t be held to that. You’re going to be liable if it [the cost of materials] goes up,’” Howard stressed.
According to another recent study, this one from Zillow, it is not only the costs of new home construction that is pricing many home buyers out of the market. Zillow says that home prices are rapidly increasing faster than people make in an entire year, projecting price growth to reach 22% year-over-year in May.
Meanwhile, the Fed’s recent rate hike has resulted in rising borrowing costs, in addition to already historic highs for home prices.
I am very, very concerned that we’re going to see the housing markets slow down dramatically, which is a bad sign for the consumers, and it’s an equally bad sign for the American economy. We’re very worried right now,” Howard concluded.