US homebuilder confidence unexpectedly falls in June

Confidence among homebuilders in the US unexpectedly deteriorated in June, hitting its lowest level this year, as high mortgage costs undermined potential buyer interest and weighed on prospects of increased demand.

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), which looks at current sales, buyer traffic and the outlook for sales of new construction homes over the next six months, showed that builders’ sentiment for newly-built single-family homes decreased in June.

The report, published on Wednesday, showed the index falling to 43, two points lower than the previous month and the lowest reading since December 2023.

The June print is well below the key threshold of 50 that separates expansion from contraction. “Persistently high mortgage rates are keeping many prospective buyers on the sidelines,” NAHB chair Carl Harris said.

Meanwhile in the UK, inflation eased to the Bank of England’s two per cent target in May for the first time in nearly three years, data published by the Office for National Statistics showed on Wednesday.

Consumer price inflation softened to two per cent in May, as expected by economists, down from April’s 2.3 per cent print, the data showed. Inflation has now reached the BoE’s target for the first time since July 2021.

On a monthly basis, prices rose at the rate of 0.3 per cent in May, the same rate registered in April compared to expectations of 0.4 per cent. Core inflation, that excludes prices of food, energy, alcohol and tobacco, decelerated to 3.5 per cent in May from 3.9 per cent the prior month. The ONS said the drop in inflation was largely due to falling food prices, while the cost of motor fuel rose slightly.

Finally, property investment in China fell 10.1 per cent in the first five months of 2024 compared to last year. The fall comes on the heels of a drop of 9.8 per cent in January-April, even as policymakers continued with their policy of supporting the sector and shoring up consumer confidence.

On the other hand, floor space of new homes sold plunged by 20.3 per cent in the first five months of the year compared with the same period of 2023. The total sales value of new homes plummeted by 27.9 per cent, year on year.

China’s property market recession, soaring government debt and deflationary pressures remain heavy drags on the economic activity of the world’s second largest economy.

This article does not constitute legal and/or financial advice and is being issued for information purposes only by Bank of Valletta plc, 58, Zachary Street, Valletta. Bank of Valletta is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap. 371 of the Laws of Malta) and the Investment Services Act (Cap. 370 of the Laws of Malta).