NAHB reveals latest homebuilder sentiment
Builder sentiment continued to weaken in February due to worsening supply chain bottlenecks and rising construction costs, according to the National Association of Home Builders (NAHB).
Builder confidence in the market for newly constructed single-family homes slipped one point to a reading of 82 in February, the NAHB/Wells Fargo Housing Market Index (HMI) revealed. This marked the second consecutive month that the HMI has dropped by a single point. However, the index has posted solid readings at or above the 80-point benchmark for the past five months.
“Production disruptions are so severe that many builders are waiting months to receive cabinets, garage doors, countertops and appliances,” NAHB chairman Jerry Konter said. “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.”
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Builders reported good sales conditions this month as the HMI component measuring current single-family home sales rose one point to 90. Meanwhile, the component gauging sales expectations in the next six months dropped two points to 80, and the component charting traffic of prospective buyers declined four points 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.”