Builder confidence hit its lowest reading since July of 2020, according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), fueled by trends of soaring home prices, construction costs and supply shortages.
While home-buying interest remains at a high level, the cost of materials and inability for builders to acquire them is preventing the supply chain from meeting demand.
“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, a custom home builder from Tampa, Florida, in a statement. “Policymakers need to find long-term solutions to supply-chain issues.”
The big picture:
The HMI index gauging broader sales conditions fell also, from 86 to 81, as the component that measures traffic of prospective buyers decreased an identical amount, dropping from 65 to 60. On the other hand, the HMI component that measures expected single-family home sales remained steady at 81.
That metric has dropped two cumulative points since the beginning of the year.
“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,” said NAHB Chief Economist Robert Dietz.
Jesse Williams is RISMedia’s associate online editor. Email him your real estate news ideas to firstname.lastname@example.org.