The NAHB/Wells Fargo housing market index is down 6 points to 50 in August after an unrevised 56 in the prior month. The index is below the consensus of 56 in the Econoday survey of forecasters. The decline appears to be mainly due to the recent upward moves in mortgage interest rates that are approaching the highs of the fall of 2022. The average Freddie Mac 30-year fixed rate mortgage carries an interest rate of 6.93 percent for August to-date compared to 6.85 percent in July and 6.70 percent in June, and is the highest since 6.74 percent in November 2022.

NAHB Chair Alicia Huey said,"Rising mortgage rates and high construction costs stemming from a dearth of construction workers, a lack of buildable lots and ongoing shortages of distribution transformers put a chill on builder sentiment in August." Although lack of supply in the existing home market has supported building activity, buyer traffic has fallen off.

The component index for current single-family home sales is down 5 points to 57 in August and is its lowest since 56 in May. The index for expected single-family home sales is down 4 points to 55 in August and is its lowest since 56 in May. The index for buyer traffic is down 6 points to 34 and is lower than the prior two months' readings.

Homebuilders are turning to price cuts and other incentives to sell homes. In August, the share of homebuilders cutting prices rose to 25 percent after 22 percent in July. The average price reduction is 6 percent in August and July. The share of homebuilders using incentives to assist sales is up to 55 percent in August from 52 percent in July.

Forecasters expect the housing market index for August, despite a new rise underway in mortgage rates, to hold steady at 56 after edging 1 point higher in July.

The housing market index is a monthly composite that tracks home builder assessments of present and future sales as well as buyer traffic. The index is a weighted average of separate diffusion indexes: present sales of new homes, sales of new homes expected in the next six months, and traffic of prospective buyers of new homes.

This report provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as the housing market index, investors can gain specific investment ideas as well as broad guidance for managing a portfolio. Whether the housing market index reflects new home sales or home resales, once a home is sold, it generates revenues for the realtor and the builder. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month. Since the economic backdrop is the most pervasive influence on financial markets, home sales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the existing home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.