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FairfaxReal EstateHeadwinds cause builder confidence to sag a little

Headwinds cause builder confidence to sag a little

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Strong buyer demand helped to offset supply-side challenges relating to building materials, regulation and labor, but builder confidence in the market for newly built single-family homes inched down in July, according to new data from the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).

The overall score dipped one point to 80 (on a zero-to-100 scale) for the month.

“Builders are contending with shortages of building materials, buildable lots and skilled labor as well as a challenging regulatory environment,” said NAHB chief economist Robert Dietz, in parsing the new data.

“This is putting upward pressure on home prices and sidelining many prospective home-buyers even as demand remains strong in a low-inventory environment,” Dietz said.


Resulting from a monthly survey that NAHB has been conducting for 35 years, HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.”
The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.”

Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

The three major HMI indices were mixed in June. The HMI index gauging current sales conditions fell one point to 86, the component measuring traffic of prospective buyers dropped six points to 65 while the gauge charting sales expectations in the next six months posted a two-point gain to 81.

Looking at the three-month moving averages for regional HMI scores, the Northeast fell four points to 75, the Midwest moved one-point lower to 71 and the West posted a two-point decline to 87. The South held steady at 85 in the survey.

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HMI tables and additional information can be found at www.nahb.org/hmi.

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