Homebuilder confidence took a steep drop in May, tallying a fifth consecutive month of declines, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released on Tuesday.

A decline in consumer demand amid rising interest rates, substantial increases in materials costs and continued home price growth led builder confidence to drop eight points to 69 in May, the lowest level the metric has reached since June 2020, only a few months after the coronavirus pandemic breached U.S. soil.

“The housing market is facing growing challenges,” NAHB Chief Economist Robert Dietz said in a statement. “Building material costs are up 19 percent from a year ago, in less than three months mortgage rates have surged to a 12-year high, and based on current affordability conditions, less than 50 percent of new and existing home sales are affordable for a typical family. Entry-level and first-time home buyers are especially bearing the brunt of this rapid rise in mortgage rates.”

NAHB Chairman Jerry Konter added that the industry’s affordability woes have finally attracted enough attention for the White House to respond with some action to help ease the situation.

“Housing leads the business cycle and housing is slowing,” Konter added in a statement. “The White House is finally getting the message and yesterday released an action plan to address rising housing costs that emphasizes a very important element long-advocated by NAHB — the need to build more homes to ease the nation’s housing affordability crisis.”

The HMI measures builder sentiment of the current state of single-family home sales and sales expectations for the upcoming six months as “good,” “fair” or “poor” and has builders rate the traffic of potential homebuyers as “high to very high,” “average” or “low to very low.” The NAHB then tabulates those scores to create a seasonally adjusted index. Any index over 50 indicates that more builders view conditions favorably than not.

All three HMI indices saw significant losses during May, with the HMI measuring current sales conditions falling by eight points to 78, the index gauging sales expectations for the next six months dropping 10 points to 63 and the index measuring traffic of potential buyers decreasing by nine points to 52.

Regionally, the Northeast HMI was the only one that remained constant from the previous month, at 72. The Midwest HMI declined seven points to 62, the South HMI dropped two points to 80, and the West HMI fell six points to 83.

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