Home builder confidence edges lower

trustWashington DC – Rising inflation concerns and ongoing supply chain disruptions have boosted homebuilders sentiment by four months, according to the National Association of Home Builders (NAHB), even as consumer demand remains robust. According to the NAHB/Wells Fargo Housing Market Index (HMI) released today, builders’ confidence in the new-build single-family home market fell one point lower to 83 in January. The HMI has fluctuated at levels of 83 for the past three months. 83 or 84, the same pace as in spring 2021.

“Higher material costs and lack of availability add weeks to typical single-family construction times,” said Chuck Fowke, president of NAHB. “NAHB analysis indicates that the total cost of housing materials has increased by nearly 19% since December 2021. Policymakers need to take action to restore supply chains. Getting a new softwood timber agreement with Canada and cutting tariffs is an excellent place to start.”

According to NAHB chief economist Robert Dietz, the HMI data collected in the first two weeks of January does not reflect the rise in mortgage interest rates. “While a meager existing housing stock and solid buyer demand support the need for new construction, the combination of continued increases in building materials, increasing skilled labor shortages and higher mortgage rates point to a decline in housing affordability in 2022.”

Derived from a monthly survey that NAHB said it has been conducting for 35 years, the NAHB/Wells Fargo HMI polls builders’ perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or ” arm.” The survey also asks builders to rate potential buyer traffic as “high to very high,” “medium,” or “low to very low.” The scores for each component are then used to calculate a seasonally adjusted index, with any number above 50 indicating that more builders view the conditions as good than bad.

The HMI index measuring current sales conditions remained stable at 90, the meter measuring sales expectations in the next six months fell by two points to 83 and the component that charts the traffic of potential buyers also fell. from two points to 69.

Looking at the three-month moving averages for regional HMI scores, the Northeast fell by one point to 73, the Midwest by one point to 75, and the South and West each recorded a one-point increase to 88, respectively.

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