“Although builders remain cautiously optimistic about market conditions, the quarter-point rise in mortgage rates over the past month is a stark reminder of the stop and start process that the market will see as the Federal Reserve nears the end of its ongoing tightening cycle,” said Robert. Dietz, chief economist at NAHB Dietz highlighted the importance of building additional housing for rent and for sale to mitigate inflationary pressures.“There have been some comments linking gains in housing construction to growing fears of additional inflation, but this has dragged the economy down,” he said. “More housing supply is good news for future housing inflation readings in the market. Furthermore, higher interest rates make it more expensive to finance home construction and plot development.” Despite higher interest rates, builders continued to back off sales incentives as the new home construction market heated up and resale inventory options remained limited. Reported 22% Only more construction companies reported price cuts in July, down from 25% in June.In addition, the NAHB survey revealed that the HMI, which measures current sales conditions in July, rose one point to 62, and the component that measures sales expectations in the next six months fell. Two points to 60, and the component that measures movement of potential buyers increased three points to 40 – the highest reading since June last year.