Builder sentiment slumps to lowest reading since July 2020

Supply-chain issues remain a big problem for homebuilders in the US

Builder sentiment slumps to lowest reading since July 2020

Higher construction costs and supply shortages has driven builder sentiment in the market for newly-built single-family homes to its lowest reading since July 2020.

Homebuilder confidence fell five points to 75 in August, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released Tuesday.

“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. “Policymakers need to find long-term solutions to supply-chain issues.”

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“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,” said NAHB chief economist Robert Dietz. “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 measuring current sales conditions fell five points to 81, and the component measuring traffic of prospective buyers also posted a five-point drop to 60. The gauge charting sales expectations in the next six months remained unchanged at 81.

At a regional level, the Northeast dipped one point to 74, the Midwest was down two points to 68, the South saw a three-point decline to 82 and the West experienced a two-point drop to 85.