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U.S. homebuilder confidence has fallen every month this year, a new report shows, as sales fell in Las Vegas and across the country and buyers faced “worsening affordability.”

Builder confidence in the new single-family home market fell for the 12th straight month in December, the National Association of Home Builders reported Monday. In a news release, the industry group cited higher mortgage rates, higher construction costs and “consumer demand due to deteriorating affordability” as all “lowering builder sentiment every month in 2022.”

Its latest survey found that 62 percent of builders are using incentives, including price reductions, to drive sales, president Jerry Conter said in a release.

“In this high-inflation, high-mortgage-rate environment, builders are struggling to keep housing affordable for buyers,” he said.

Robert Dietz, the association’s chief economist, noted that mortgage rates have fallen in recent weeks, but the group still expects “weaker housing conditions to persist” next year.

Locally and nationally, homebuyers have largely been holding back for months after last year’s flurry of cheap-money-fueled buying. The Federal Reserve has raised interest rates several times this year to try to fight inflation, and rising borrowing costs have led to fewer home sales.

Sales in Southern Nevada are down sharply from last year’s levels, with sellers increasingly lowering their prices and builders offering more incentives to buyers and higher commissions to agents who bring them.

Builders in Southern Nevada recorded 350 net sales — new signed purchase contracts less cancellations — in October, down 59 percent from the same month last year, Las Vegas-based Home Builders Research reported.

Builders also took permits for 545 new homes in October, down 55 percent from a year earlier, indicating a sharp drop in building plans, and their land purchases were “basically non-existent,” wrote Andrew Smith, president of the research firm.

Nationally, the pace of home sales by builders has fallen several times this year from month to month, although it rose 7.5 percent in October from September, but was still down 5.8 percent from a year earlier, federal data showed.

Tom McCormick, founder of Touchstone Living, whose Las Vegas homebuilding company targets first-time buyers, told the Review-Journal late last month that the Southern Nevada market is “much slower” and buyer traffic is down from last year.

He noted that many people can’t qualify for a mortgage because they can’t afford the higher payments that come with rising interest rates.

“Our buyers definitely feel that,” McCormick said.

As of last week, the average 30-year mortgage rate was 6.31 percent, up 7.08 percent from a month ago, but still higher than 3.12 percent a year ago, federal data showed.

“The good news for the housing market is that recent declines in interest rates have led to a stabilization in purchase demand,” Sam Cutter, chief economist at mortgage buyer Freddie Mac, said in a statement last week. “The bad news is that demand remains very weak in the face of affordability barriers that are still quite high.”

Contact Eli Segall at [email protected] or 702-383-0342. Follow up @eli_segall: on Twitter.


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