Builder confidence falls in June

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Builder confidence falls in June

By HBSDealer Staff - 06/18/2018
Builder confidence slipped in June, according to the latest Housing Market Index (HMI) from the National Association of Home Builders (NAHB) and Wells Fargo.

In the June HMI, Builder confidence in the market for newly-built single-family homes fell two points to 68 this month. The NAHB attributes the decline to elevated lumber prices.

“Builders are optimistic about housing market conditions as consumer demand continues to grow,” said NAHB Chairman Randy Noel, also a custom home builder from LaPlace, La. “However, builders are increasingly concerned that tariffs placed on Canadian lumber and other imported products are hurting housing affordability.”

NAHB Chairman Randy Noel.

Noel says that tecord-high lumber prices have added nearly $9,000 to the price of a new single-family home since January 2017.

“Improved economic growth, continued job creation and solid housing demand should spur additional single-family construction in the months ahead,” said NAHB Chief Economist Robert Dietz. “However, builders do need access to lumber and other construction materials at reasonable costs in order to provide homes at competitive price points, particularly for the entry-level market where inventory is most needed.”

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.”

The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three HMI indexes inched down a single point in June. The index measuring current sales conditions fell to 75, the component gauging expectations in the next six months dropped to 76, and the metric charting buyer traffic edged down to 50.

Looking at the three-month moving averages for regional HMI scores, the Northeast rose two points to 57 while the West and Midwest remained unchanged at 76 and 65, respectively. The South fell one point to 71.

Last week the NAHB applauded the efforts of member of congress to get softwood lumber talks with Canada back off the ground and seek a solution to rising lumber and home costs.