A contractor is moving roofing material to a house under construction at Toll Brothers Cantera at the Gale Ranch in San Ramon, California.
David Paul Morris | Bloomberg | Getty Images
Only two months ago, the house builders had never been happier. Buyers’ demand, driven by the pandemic-induced desire for larger, newer homes in the suburbs, has had a historic home-building sentiment. Now, the rising cost of building houses makes builders less optimistic.
The builder’s confidence in the single-family home market fell 3 points in January to 83, according to the NAHB / Wells Fargo housing market index. Anything over 50 is considered positive. Two months ago, the index reached a record high of 90. In January 2019, before the pandemic, it was at 75.
“Builders are facing supply constraints over the cost of timber and other materials, lack of affordable lots and a lack of labor that delays delivery times and puts increasing pressure on home prices,” said NAHB President Chuck Fowke. a home builder in Tampa, Florida.
Of the three components of the index, current sales conditions have fallen by 2 points to 90. Sales expectations for the next six months have fallen by 2 points to 83 and buyer traffic has fallen by 5 points to 68.
“While housing continues to help drive the economy forward, limited inventory is constraining more robust growth,” said NAHB chief economist Robert Dietz. “The lack of buildable lots makes it difficult to meet strong demand, and rising material prices far outweigh house price increases, which in turn harms housing accessibility.”
On a three-month moving average for regional HMI scores, sentiment in the Northeast fell 6 points to 76. It rose 2 points to 83 in the Midwest. In the south, sentiment fell by 1 point to 86, and in the west by one point to 95.