A contractor is moving roofing material on a home under construction at the Toll Brothers Cantera at the Gale Ranch home in San Ramon, California.
David Paul Morris | Bloomberg | Getty Images
Just two months ago, homebuilders have never been happier. Buyer demand, driven by the pandemic-induced desire for larger newer homes in the suburbs, has sent home industry sentiment at an all-time high. The rising cost of building homes makes builders less optimistic.
Builder confidence in the single-family home market fell by 3 points to 83 in January, according to the NAHB / Wells Fargo Home Market Index. Anything above 50 is considered positive. Two months ago, the index reached a record high of 90. In January 2019, before the pandemic struck, it was 75.
“Builders are struggling with supply-side constraints related to timber and other material costs, a lack of affordable lots and labor shortages that are delaying delivery times and pushing up house prices,” said NAHB chairman Chuck Fowke. homebuilder from Tampa, Florida, said.
Of the index’s three components, current sales conditions fell by 2 points to 90. Sales expectations dropped by 2 points to 83 in the next six months and buyer traffic by 5 points to 68.
“While housing continues to help guide the economy, limited inventory limits stronger growth,” said Robert Dietz, chief economist at NAHB. “A shortage of buildable plots makes it difficult to meet strong demand, and rising material prices are much higher than rising house prices, which in turn is hurting the affordability of housing.”
On a three-month moving average for local HMI scores, sentiment in the Northeast dropped by 6 points to 76. It rose by 2 points to 83 in the Middle East. In the South, sentiment fell by 1 point to 86 and in the West it dropped a point to 95.