After rising for two months, homebuilder confidence sipped down in June as mortgage rates skyrocketed up.
The National Association of Homebuilders’ housing market index, a measure of builder confidence fell to 15 this month, down from 16 in May. Anything below 50 indicates that more builders view the housing market conditions  as poor rather than favorable. So obviously even last month no one was jumping up and down for joy about the market, but they were cautiously increasing in their optimism that the housing bust would be shorter than expected. The latest developments have builders worried that the end is not yet in sight.

“The housing market continues to bump along trying to find a bottom,” NAHB chief economist David Crowe said. “Builders are taking their cue from consumers, who remain uncertain about the economy and their own situation. Builders are also finding it difficult to complete a sale because customers cannot sell their existing homes.”

Mortgage rates have jumped up to 5.59 percent according to recent data from Freddie Mac, a dramatic leap from rates well below 5 percent just a few weeks ago. Rates often move upward as economic conditions improve, and several reports over the past weeks and months have indicated some positive movement. For instance, new-home sales have grown during two of the last three months, and even though prices have dropped, home affordability is on the rise. 

Yet higher mortgage rates have home builders and others worried about a decrease in buyers. Where does the cycle end?