WASHINGTON, Nov 18 (Reuters) - U.S. homebuilder sentiment remained subdued in November as concerns about the labor market and household finances weighed on demand, contributing to a surge in the share of builders slashing prices to reduce new housing inventory.
The National Association of Home Builders/Wells Fargo Housing Market index edged up one point to 38 this month. It remained below the 50 breakeven point for the 19th straight month. Economists polled by Reuters had forecast the index unchanged at 37.
The small uptick could reflect a decrease in mortgage rates when the Federal Reserve resumed its interest rate cuts. But mortgage rates have halted their decline, data from mortgage finance agency Freddie Mac showed, as U.S. central bank officials signaled a reluctance to lower rates again next month.
Labor market stagnation is sidelining potential homebuyers, and new housing inventory was elevated in August, limiting the scope for builders to break ground on new projects.
"We continue to see demand-side weakness as a softening labor market and stretched consumer finances are contributing to a difficult sales environment," said NAHB chief economist Robert Dietz.
Lack of affordable housing has become a political hot-button issue. President Donald Trump this month floated a 50-year mortgage to make housing affordable, an idea that was panned by some of his supporters and housing market experts who argued it would result in homeowners paying more in interest and taking longer to build equity.
The National Association of Realtors this month estimated the median age of first-time buyers was 40 years. In the 1980s the typical home buyer was in their late 20s, the NAR said.
The survey's measure of current sales conditions increased two points to 41 this month, while its gauge of future sales fell three points to 51. A measure of prospective buyer traffic gained one point to 26.
The share of builders reporting cutting prices increased to 41%, the highest since May 2020. The average price reduction was unchanged at 6%, while the share using incentives was 65%, holding steady since September.
"More builders are using incentives to get deals closed, including lowering prices, but many potential buyers still remain on the fence," said NAHB chairman Buddy Hughes.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama
