Builder Confidence Slid 5 Points to 75 in August

Washington, DC, August 17, 2021-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 (NAHB)/Wells Fargo Housing Market Index (HMI). 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,” said NAHB Chairman Chuck Fowke, a custom home builder from Tampa, Fla. “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,” 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 gauging current sales conditions fell five points to 81 and the component measuring traffic of prospective buyers also posted a five-point decline to 60. The gauge charting sales expectations in the next six months held steady at 81.

Looking at the three-month moving averages for regional HMI scores, the Northeast fell one point to 74, the Midwest dropped two points to 68, the South posted a three-point decline to 82 and the West registered a two-point drop to 85.