NEW YORK, July 16 -- U.S. housing market sentiment in July declined to the lowest level since last December, driven by high mortgage rates and increasing borrowing costs, according to data released on Tuesday.

The Housing Market Index, which measures builder confidence in the market for newly built single-family homes, fell one point to 42 this month from June, the National Association of Home Builders (NAHB) said in a report.

This is the lowest reading since December 2023, and lower than estimates. Any number under 50 indicates that more builders view conditions as "poor" than "good."

Mortgage rates that averaged 6.92 percent in June per Freddie Mac, along with elevated rates for construction and development loans, continue to put a damper on builder sentiment, the report said.

According to Freddie Mac, the U.S. national average on the 30-year fixed-rate mortgage stood at 6.89 percent last week, down from 6.95 percent a week prior.

"While buyers appear to be waiting for lower interest rates, the six-month sales expectation for builders moved higher, indicating that builders expect mortgage rates to edge lower later this year as inflation data are showing signs of easing," NAHB Chairman Carl Harris said.

The combination of elevated mortgage rates and high home prices has pushed house builders to lower home prices. The latest NAHB survey revealed that 31 percent of builders cut home prices to bolster sales in July, higher than June's 29 percent.

As signs show that U.S. inflation is easing, NAHB expected the Federal Reserve to begin rate reductions at the end of this year, a positive move that will lead to lower interest rates for home buyers, builders and developers.

The index measuring sales expectations in the next six months increased one point to 48, according to NAHB.

"And while home inventory is increasing, total market inventory remains lean at a 4.4 months' supply, indicating a long-run need for more home construction," said NAHB Chief Economist Robert Dietz.

  - Xinhua