Despite strong buyer demand, builder sentiment continued to slip in February as the industry grapples with ongoing building material production bottlenecks, reports the NAHB.
The NAHB/Wells Fargo Housing Market Index (HMI), measuring builder sentiment in the market for newly built single-family homes, moved one point lower to 82 in February, marking the second month that confidence levels have declined by a single point. Despite these monthly declines, the HMI has posted solid readings at or above the 80-point mark for the past five months.
“Production disruptions are so severe that many builders are waiting months to receive cabinets, garage doors, countertops, and appliances,” says NAHB chairman Jerry Konter. “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.”
The HMI index gauging current sales conditions increased one point to 90, the gauge measuring sales expectations in the next six months fell two points to 80, and the component charting traffic of prospective buyers posted a four-point decline to 65.
Looking at the three-month moving regional scores, the Northeast increased three points to 76, the West rose one point to 89, the Midwest fell one point to 73, and the South edged one point lower to 86.
“Residential construction costs are up 21% on a year-over-year basis, and these higher development costs have hit first-time buyers particularly hard,” says 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.”
