Builder confidence lags in February
The National Association of Home Builders (NAHB) reported today that builder sentiment fell this month despite strong home buyer demand.
Builder confidence fell this month by a single point to 82, according to the latest NAHB/Wells Fargo Housing Market Index (HMI). This marks the second month in a row that confidence in the market for newly-built single-family homes has slipped.
Despite the drop, the NAHB noted that readings have been positive while measuring at or above the 80-point mart for five-straight months.
But supply chain issues continue to haunt home builders in addition to rising home prices.
“Production disruptions are so severe that many builders are waiting months to receive cabinets, garage doors, countertops and appliances,” said new NAHB Chairman Jerry Konter. “These delivery delays are raising construction costs and pricing prospective buyers out of the market. Policymakers must make it a priority to address supply chain issues that are harming housing affordability.”
The HMI index gauging current sales conditions increased one point to 90, the gauge measuring sales expectations in the next six months fell two points to 80, and the component charting traffic of prospective buyers posted a four-point decline to 65.
“Residential construction costs are up 21% on a year over year basis, and these higher development costs have hit first-time buyers particularly hard,” said NAHB Chief Economist Robert Dietz. “Higher interest rates in 2022 will further reduce housing affordability even as demand remains solid due to a lack of resale inventory.”
Looking at the three-month moving averages for regional HMI scores, the Northeast increased three points to 76, the West rose one point to 89, the Midwest fell one point to 73 and the South edged one point lower to 86.