A contractor moves roofing material from a home under construction at the Toll Brothers Cantera housing project at Gale Ranch in San Ramon, California.
David Paul Morris | Bloomberg | Getty Images
Just two months ago, homebuilders had never been happier. Buyer’s demand, driven by the pandemic-induced desire for bigger newer homes in the suburbs, had sentiment to homebuilders at an all-time high. Now the rising cost of building houses is making builders less optimistic.
Builder confidence in the single-family home market dropped 3 points to 83 in January, according to the NAHB / Wells Fargo Housing Market Index. Anything over 50 is considered positive. Two months ago, the index hit a record high of 90. In January 2019, before the pandemic hit, it was at 75.
“Builders grapple with supply-side constraints related to timber and other material costs, a lack of affordable lots and labor shortages that slow delivery times and put upward pressure on house prices,” said NAHB chairman Chuck Fowke, a Tampa homebuilder. Florida. .
Of the three components of the index, current sales conditions declined 2 points to 90. Sales expectations for the next six months fell 2 points to 83 and buyer traffic declined 5 points to 68.
“As housing continues to advance the economy, limited supply is constraining more robust growth,” said NAHB chief economist Robert Dietz. “A shortage of building lots makes it difficult to meet strong demand and rising material prices far outstrip house price increases, which in turn hurts housing affordability.”
On a three-month moving average for regional HMI scores, sentiment in the Northeast dropped 6 points to 76. It rose 2 points to 83 in the Midwest. Sentiment dropped 1 point to 86 in the south and one point to 95 in the west.