Builder Confidence at 13-Month Low
The National Association of Home Builders said higher construction costs and supply shortages, along with rising home prices pushed builder confidence to its lowest reading since July 2020.
The NAHB/Wells Fargo Housing Market Index said builder sentiment in the market for newly built single-family homes fell five points to 75 in August. The HMI index gauging current sales conditions fell five points to 81 and the component measuring traffic of prospective buyers also posted a five-point decline to 60. The gauge charting sales expectations in the next six months held steady at 81.
Regionally, the Northeast fell one point to 74; the Midwest dropped two points to 68; the South posted a three-point decline to 82; and the West registered a two-point drop to 85.
“While the demographics and interest for home buying remain solid, higher costs and material access issues have resulted in lower levels of home building and even put a hold on some new home sales,” said NAHB Chief Economist Robert Dietz. “While these supply-side limitations are holding back the market, our expectation is that production bottlenecks should ease over the coming months and the market should return to more normal conditions.”
“Buyer traffic has fallen to its lowest reading since July 2020 as some prospective buyers are experiencing sticker shock due to higher construction costs,” said NAHB Chairman Chuck Fowke.
On Tuesday, the Mortgage Bankers Association released its monthly Builder Applications Survey, reporting mortgage applications for new home purchases in July decreased 27.4 percent from a year ago and by 4 percent from June.