Builders’ confidence in the market for new homes has slipped for the fourth consecutive month, according to the National Association of Home Builders (NAHB) / Wells Fargo Housing Market Index.
The index edged down from 79 in March to 77 in April. It stood at 83 a year ago.
Any reading above 50 indicates optimism in the market’s strength.
Sentiment among builders in the Northeast gained a point to 72. In the Midwest, it fell three points to 69. Builders’ outlook in the South slipped two points to a still-healthy 82 and in the West the view lost one point to 89.
Among the index’s three categories, “present sales conditions” dropped two points to 85 and buyer traffic took a six-point hit to settle at 60. 
“Sales traffic and current sales conditions have declined to their lowest points since last summer as a sharp jump in mortgage rates and persistent supply chain disruptions continue to unsettle the housing market,” NAHB chair Jerry Konter said in a statement accompanying the index’s results.
The national average index rate for a 30-year, fixed-rate mortgage loan was 5.28 percent on 22 April, according to Bankrate.com, its highest in more than ten years. The rate was 3.9 percent in early March, before the U.S. Federal Reserve raised its interest rate.
Supply shortages also are pushing prices up; the median price of a newly built home in February was more than 10 percent higher than a year before, according to the NAHB.
“The housing market faces an inflection point as an unexpectedly quick rise in interest rates, rising home prices, and escalating materials costs have significantly decreased housing affordability, particularly in the crucial entry-level market,” Robert Dietz, NAHB’s chief economist, said in a statement quoted by Bloomberg.
TREND FORECAST: The U.S. housing market is narrowing, now accommodating mostly cash-rich buyers with above-median incomes. Prices are unlikely to fall in any significant way until the U.S. Federal Reserve raises its key interest rate above 3.5 percent, which may well push mortgage interest rates close to, if not into, double digits.
Yet, there are always the wild cards, and the wildest of them being played now is the Ukraine War and America and NATO’s weapons-push to Ukraine to ramp the war up and keep it roaring. Should the war continue to escalate, spiking inflation yet higher and the war spreads beyond the current borders, equity markets and economies across the globe will fall into Dragflation: declining economic growth and rising inflation. Thus, should this wild card be played, housing prices rapidly decline beyond our current estimates as American and NATO challenge Russia and set the world on track for WWIII. 
And today, another card from the wild card deck was played. After refusing to supply heavy armament to Ukraine in their fight against Russia, Germany’s Defense Minister Christine Lambrecht said “We decided yesterday that we will support Ukraine with anti-aircraft systems … which is exactly what Ukraine needs now to secure the airspace from the ground.” 

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