Commentary Directory

US Housing Market Index: September 2023

Jacob Hess
September 18, 2023

US Housing Market Index

9/18/2023 (September 2023)

45 (-5 pts)


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Present Sales Index 51 (-6 pts)
Next 6 Months Index 49 (-6 pts)

The NAHB Housing Market Index fell -5 pts to 45 in September, the lowest reading since April of this year. The index had experienced a slight come back over the summer, peaking at 56 in July, before giving way to an eleven point decline over the past two months. Both present and expected sales (over the next six month) saw similar declines to 51 and 49 respectively. In September, 32% of builders reported cutting home prices, compared to 25% in August. That’s the largest share of builders cutting prices since December 2022 (35%). In a special question, it was revealed that 42% of new single-family home buyers were first-time buyers on a year-to-date basis in 2023. This is significantly higher than the 27% reading from a more normalized market in 2018.


The renewed decline in the HMI is a result of mortgage rates jumping back over 7% in the last few weeks. The initial rise in interest rates had a significant impact on housing market sentiment but that was countered by the misguided view that rates would not stay elevated in the long-term. Now, it seems that there is more of a consensus that the Fed will keep borrowing costs “higher for longer” and rate cuts are not coming any time soon. The September reading at 45 is still 14 pts off of the near-term low set in December 2022 at 31, but it does seem like we could return back to that territory in the coming months, especially if the Fed hikes again. For context, that is the lowest since April 2020 and before that since June 2012. The all-time low for the HMI was set in January 2009 at 8.