Higher construction costs and supply shortages along with rising home prices pushed builder confidence to its lowest reading since July 2020, according to the National Association of Home Builders/Wells Fargo Housing Market Index. Builder sentiment in the market for newly built single-family homes fell five points to 75 in August.
"Buyer traffic has fallen to its lowest reading since July 2020 as some prospective buyers are experiencing sticker shock due to higher construction costs," says Chuck Fowke, NAHB chairman. "Policymakers need to find long-term solutions to supply-chain issues."
"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," says Robert Dietz, NAHB chief economist. "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."
The HMI index gauging current sales conditions fell five points and the component measuring traffic of prospective buyers also posted a five-point decline. The gauge charting sales expectations in the next six months held steady.
